Small-cap altcoins have the potential to offer investors very significant returns when markets are on an upswing. This is because their prices typically respond more quickly and dramatically to market movements, resulting in a greater percentage increase or decrease compared with larger coins and tokens.
As such, these investments can be incredibly profitable during bull runs. However, this extra volatility also means that small caps could suffer much steeper losses than regular currencies if the crypto market goes into freefall. Therefore, care needs to be taken when trading small-cap altcoins as they come with higher risks due to variance in price movement over short periods. If you want to invest in bitcoins then you should visit online trading platforms like Wealth Matrix.
Exploring the Potential of Investing in Smaller Altcoins
During the bullish period of 2021, the small-cap altcoins became the best performers and also produced exceptional returns for investors. While the bullish rally started to diminish, it started to be obvious that these altcoins might fare better in volatile markets. The latest downward trend has transformed their volatility against them, leading to an enormous decrease in the value of nearly all of these coins by more than 95%. In the event the market doesn’t recover swiftly, the scenario might get a whole lot worse.
Several small-cap altcoins displayed an impressive performance in the cryptocurrency area throughout the bull market in 2017. Their profits, nevertheless, were short-lived because the subsequent bear market took its cost in 2018. The decline created painful consequences for investors who suffered losses of more than 90% of their money. Some altcoins, in many instances, have vanished entirely, leaving purchasers with useless holdings, like carrying useless bags.
The situation of coins like ICON (ICX) shows the trend. Despite being among the top performers in the prior 12 months, this altcoin experienced a substantial decrease to near-zero levels throughout the 2018 bear market. This particular situation shows naturally that the thing that makes these small-cap altcoins extremely attractive is their Achilles heel, which could cause them to become susceptible to huge losses in bad market problems.
Is it worth investing in small-cap altcoins?
It’s a smart idea to simply invest what you can afford to lose while putting money into the fluctuating crypto industry. But there are instances where owners hold onto coins which are losing value because of the sale of the coins at the correct time. Throughout these crucial moments, you should deeply assess if it’s the proper time to give up the ship and reduce losses or even to demonstrate unwavering determination as well as hold onto their investment with constant belief. An investor will initially want to determine whether the project is safe. The project’s roadmap and utility could usually determine if it could endure a long bear market.
Even with no adequate support, this might not always be sufficient, but it’s a great pointer. These small altcoins can offer owners a good income, particularly during a bull market. The altcoin went through a close-to-zero decline throughout the earlier bear market, as evidenced by the ICX situation. Once the following bear market came into being in 2021, nonetheless, ICX created a remarkable recovery, leaping above USD three in value as well as catching up with bigger players like Cardano (ADA). This shows the tenacity as well as the development potential of small altcoins.
If the altcoin was bought at just USD 0.1 in this year many might have called it a lost cause. This narrative, though, isn’t exclusive to this specific altcoin’s small cap. It echoes the footsteps of many altcoins which have effectively withstood the bear market. Likewise, the altcoin has dropped to the USD 0.3 amount following the latest market crash, showing that investors in little cap altcoins ought to get ready for another long wait.