Life Changing Gains Or Average Gains?
When it comes to alts and especially micro caps, you have to answer a very simple question for yourself. Do you want to experience some decent gains, or are you looking for gains that will be so significant that they can actually change your life? Getting to the heart of this is the first step. The information I am about to share will test that decision if you answered in favor of massive gains. It may indeed cause you to change your mind because the risk involved here is immensely high. It is important to note that this is not investment advice and you should immerse yourself in your own personal research before making any decisions. This is what I have gleaned through being in this market for the past 7 years. It feels more like 3 though, time really seems to be accelerating at an ever increasing pace. Before I address the risk factor, it is important to look at another element that often wears investors down and ultimately pushes them out of the game.
Time Is A Powerful Tool
The simple yet highly powerful principle of time is one of the key elements here. This is true of any market and true for the entire Crypto market as a whole. Significant time in this market should in most cases see positive returns. However, When it comes to smaller projects, this is often a compulsory prerequisite that can go on for extended periods. Even though a specific project can have massive potential, it more often than not requires a very long time for the market to identify it and then validate it with price appreciation.
This can be seen in a project like Polygon and more recently, Solana. Polygon, previously known as Matic sat at the $0.02 level for absolute ages before violently breaking out above $2! In the time that investors are awaiting recognition, the price can either remain largely unchanged, or suffer highly volatile swings. These swings can sometimes see projects sink to unimaginable lows before suddenly rising into new levels through periods of crazy price discovery. What is the point I am making here?
Simply put, you don't get to decide the timeframe. You have to make a prior decision to sit out out this period of necessity. You also need to decide whether or not you will add to these positions when prices drop significantly. In other words, you need to have conviction. Forget about diamond hands, that comes second to conviction. It is your unwavering conviction that empowers you to hodl when all seems lost. Can you stay the course and have you done enough research in order to build a strong conviction in your decision?
The Death Rate
It is no secret that many altcoins fade away into obscurity and while they may still exist, the trading volume and blockchain activity are synonymous with a mall during lock down. The value and market cap of these projects is also for the most part absolutely erased. This is unfortunately the risk that is always looming in the background and can even happen to a good project, in the event that the team just become weary in trying to establish their project. The risk of losing the majority of your investment increases significantly when you begin to invest in unknown projects.
This is unfortunately the price one must pay because once stability is established, gains are very much restricted, though exceptional projects can sometimes still surprise further. Investors in altcoins and particularly micro caps need to consider these points very carefully before taking the plunge. My approach is always to start with a minimal investment and to average in further on the road to higher levels. If the trend is up and I buy the dips, it usually works out very well for me.
As mentioned earlier this is not investment advice and doing your own research in this particular sector is absolutely imperative.
