Crypto trader Lark Davis shared his low and high risk methods to identify the next big players in the altcoin market.
In a new video, Davis told his 183,000 YouTube subscribers that some investors are overlooking the fact that altcoins have quietly made significant gains in recent months.
Some people have been inactive, waiting for the magical altcoin season, even though it has been going on for an entire year. Altcoins bring insane returns to investors that exceed investors’ returns from bitcoin.
In this regard, the trader advises to pay attention to coins with a market cap of $ 100 to $ 200 million, as they offer the best risk / reward ratio. Typically, these projects have work products and a growing user base, but have limited market coverage.
Davis added that solid projects like Aave can grow exponentially without significant setbacks. In support of his words, the analyst suggests studying the basics of the protocol:
Focus on the baseline, that’s what will bring you these success. Look for such a strong token economic model that Aave has. Look for original ideas and powerful technologies that Aave possesses. Look for a strong team that Aave has. Look for a good blocked total cost. This is one of the top leaders. Investigate if the model is stable. They have it pretty simple. Evaluate how the remaining issues of tokens can affect the value of the tokens you buy … Also always find out if you can get tokens for free.
Davis stressed that while mid-cap coins will not generate 100x returns, they have the potential to deliver 20-50x returns.
In terms of opportunities to earn 100x the profit, Davis recommends looking for coins with a market capitalization of less than $ 100 million. However, he noted that participation in these projects is associated with an extremely high risk.
When investing in low-cap coins, Davis advises students to practice risk management techniques to protect their capital.
One of the easiest ways to minimize risk when playing with these coins is to maintain a low position size … I usually invest about 1% of my portfolio in coins with low market cap … However, you need to think twice before considering a large investment in coins with high risk. because things can collapse very quickly.
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