Tokens with a small marketcap represent huge opportunity and higher risk at the same time.
Where does the opportunity and where does the risk come from? It is a two edged sword.
When a coin has a marketcap of $ 500.000 than it only takes $ 500.000 to double the marketcap, and by doing so, doubling your investment as well. So it takes a relatively small amount of money to get the chart booming. The same goes the other way round, as it also does not take that much to lower the price of the coin. We set aside a portion of our portfolio for investing in small cap gems, as these might prove to be highly profitable.
Small cap coin are the first to vanish in a bearmarket, as the team often runs out of money and they cannot keep the project afloat. When a small cap project survives the bearmarket, you have That is why you need to pay close attention to the project, before investing in it.
So what are signs you look for in a healthy project?
For your convenience we already scored the gems displayed on our website, giving you a pretty good idea about every project.
Having a active Telegram group is one of the signs of a healthy project.
Off course you need to check the group up close. The numbers alone do not tell the whole story.
A lot of groups have fake members to appear lively and big. You can easily tell, as the activity in the group tells you if there is real livelyness or not.
How do the people communicate? In a bearmarket you may expect more wining than in a bull market, but overall you want the vibe to be positive. How do the moderators react to the members of the group?
Are they polite or just plain rude? All indicators of a healthy project or not.
For small marketcap projects, you may not expect them to have a lot of social media channels.
Discord and Telegram are popular channels for crypto. Off course Instagram, Facebook, Reddit and TikTok are in the gemae. If they do have multiple channels, check for the same indicators as explained in the bulletpoint above about Telegram.
One other factor is the professionality of the website. Does it look like a child made it? Than that is probably true.
Utility
One key factor for succes is utility. Off course there are projects who thrive by hype alone, but the quality projects need utility as well. Please note, that a solid product, without any good marketing or hype, will not sell, even if it is better than existing products on the marketplace.
You will look for utility that has proven succesful in earlier projects or utility that is brand new and is marketed right.
Sorts of utility:
- earn: earn money by holding the token or NFT;
- real life utility: like the NFT Alfa Romeo made for their new model;
- play to earn: literally play to earn money;
- gas fees: network tokens needed to complete transactions;
- proof of work;
- proof of stake;
- art;
- membership
- increase APR
- and so on
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