Are low-market-cap altcoins worth investing in?

There are about 18,500 cryptocurrencies listed on CoinMarketCap and nearly 10,000 on the Bitpush Index, yet only the top 750 cryptocurrencies have a market cap of more than $25 million. If you put $1,000 into a token worth $10 million and wait for its market cap to become $1 billion, the investor will get $100,000. If the value was lower when you bought the token, you might get more. However, will this happen, and is it worth the gamble?

The idea of ​​buying low-market-cap tokens is very tempting to many people, who see it as an opportunity to make incredible wealth with a relatively small initial investment. Furthermore, with the rapid development of the crypto market, this wealth may come in a matter of months, unlike the traditional stock market, which may take years. Many investors hope to buy a token at a very low price and become rich overnight. Unfortunately, however, this is often difficult to achieve.

99.5% of the tokens outside the top 250 will never make it to the top 100, let alone be valued at over $1 billion. There are several factors that contribute to this. First, due to the sheer number of solid projects in the cryptocurrency space, there simply isn’t enough room for a decent project to make it to the top 100. Only the most promising, innovative, and exciting projects will make it there and gain investor attention. Any project with questionable use cases, poor development, or negative factors will not be around for long.

Furthermore, given how easy it is to make a project and get it listed on CoinMarketCap, there are thousands of bad projects that were either created as jokes, scams, or just as exercises for developers. Anyone can create their own cryptocurrency or token in 30 minutes by following an online guide, even if they have no development experience. Many cryptocurrencies have been completely abandoned by their developers, making it almost impossible to revive them. Of the projects that still exist, the vast majority are cheap copies of Dogecoin and other meme coins that are trying to market and exploit people's desire to find the next big cryptocurrency.

Do you still have a chance of finding the next big project? It’s unlikely, even if you do adequate research and find a project with a compelling use case, strong developers, and a solid marketing team. Since the end of the ICO craze in 2017, projects have become less focused on fair launches and distributing tokens to the public. Instead, just like in traditional finance, projects go to venture capital firms and angel investors and distribute large amounts of tokens to them. This guarantees that the project is properly funded while also ensuring that all appropriate regulations are followed. Recent projects that have followed this model include Solana, Avalanche, and Polkadot. VCs also provide these projects with a team of top-notch advisors and connections, which helps them get listed on well-known exchanges such as Coinbase, Binance, and FTX. This further perpetuates the cycle of these tokens becoming popular and popular, leading to higher prices and market caps.

The vast majority of people who buy low-cap tokens will eventually lose money. Even if a project rises in the short term, small tokens lack liquidity and volume. Additionally, people who buy low-cap tokens may not want to sell until they see incredibly high returns, which could mean the difference between ending up up 1,000% and then seeing the token drop 95% in value and ultimately losing money. One of the best strategies for investors with a high risk tolerance is to find a project that has recently completed several rounds of VC funding and purchase the token after fully researching it to ensure it is a promising use case.

Although investing in low market cap coins may be exciting, it is a poor choice. It is more akin to gambling, and adequate research will only increase your odds of success, but will not change the fact that it is extremely risky and may result in losing money.