#6 What Are Low Cap Coins in Crypto?

Low cap coins are a relatively new concept for many investors, especially newcomers to the crypto market. The term refers to cryptocurrencies with small market capitalizations compared to mid and top cap coins.

Low cap coins typically have market caps under $50 million. These coins usually sport cheap prices, low 24-hour trading volumes, and minimal intraday liquidity. While some see this as an attractive investment channel, honestly, most traders lack the knowledge to identify potentially worthwhile low cap gems – I've seen too many get burned chasing these!

So what exactly are low cap coins? How can they be applied to crypto investing? And how might one find potential low cap coins with actual promise? Let's dive into this rabbit hole together.

Understanding Market Capitalization

Before I explain low cap coins in detail, you need to grasp how market capitalization works in crypto.

Market cap (or market capitalization) applies to both stocks and individual blockchain projects. In crypto, this metric shows us the current market value of a specific blockchain network – what we commonly call Coin Market Cap. It's calculated by multiplying a cryptocurrency's circulating supply by its unit price (1 coin).

The formula is simple: Market Cap = Circulating Supply × Price

For example: imagine a blockchain project called A. Project A has 1,000 coins total, all circulating. The current market price of A is $100. So what's coin A's market cap?

Market Cap = 1,000 × $100 = $100,000

What Makes a Coin "Low Cap"?

Low cap coins refer to newly launched coins/tokens with smaller capitalizations than other coins. But how small must the cap be to qualify?

Low cap coins have market caps below $50 million and typically feature cheap prices. You can spot them by these characteristics:

• Small market capitalization
• Relatively cheap price
• Low 24-hour trading volume
• Poor intraday liquidity

I've watched countless new investors throw money at these coins thinking they'll find "the next Bitcoin," only to see their investments vanish in thin air. These coins can be incredibly volatile!

Distinguishing Between Top, Mid, and Low Cap Coins

Top Cap Coins

Top coins boast market caps of $1 billion or more with excellent liquidity. They typically rank high on CoinMarketCap. These coins show strong growth potential, have established market positions, practical applications, and rarely disappear completely.

If you're looking for long-term investments, these aren't bad choices. Their high trading volumes ensure decent liquidity, though frankly, the massive gains have probably already happened.

The most prominent top coins include Bitcoin (BTC), Ethereum (ETH), Tether (USDT), etc.

Mid Cap Coins

Mid caps have market caps between $100 million and just under $1 billion.

These coins attract significant interest because they can surge when capital flows increase. With moderate prices and potential for sudden price increases, they're typically more resilient than smaller coins.

Mid caps offer relative safety for new investors while providing better returns than top caps. However, market timing remains crucial – I've seen too many people buy mid caps at local tops!

Low Cap Coins

As mentioned, low caps have market caps under $50 million. They're the wild west of crypto – potentially enormous gains but far more likely to crash and burn.

I've found that most successful crypto traders build their portfolios primarily with top and mid caps, using only a small percentage for low cap speculations. It's the sensible approach, though not nearly as exciting as throwing money at the newest meme coin!

Remember – the lower the market cap, the easier it is for whales to manipulate prices. I've watched countless promising projects get pumped and dumped by coordinated groups.

Trading low caps requires serious research skills and a strong stomach for volatility. You need to be prepared to lose everything you put in – don't let FOMO drive your decisions!