Small-cap cryptos are one of the best investments if you know the market very well. These cryptocurrencies are often on the extreme end of the risk-to-reward spectrum, and investors who wish to put some fun money to play here can reap the benefits if they know what they are doing. But of course, even if you know the projects very well, investing in most projects below $100 million in market capitalization is a risky ordeal, and I wouldn’t gamble any real money into these small-cap cryptos. By the rule of thumb, cryptocurrencies as a whole should constitute 5% of your portfolio, and such small-cap investments should make up even a smaller portion of that.
Still, if you’re adamant on your hunt for high-risk, high-reward small-cap cryptos, here are three you should explore:
Worldcoin (WLD-USD)
Worldcoin (WLD-USD) is the newest buzz in town and is only six days after its launch as of writing. The project aims to “…scale a reliable solution for distinguishing humans from AI online while preserving privacy, enable global democratic processes, and eventually show a potential path to AI-funded UBI.” It will do that by first scanning people’s irises to differentiate them from AI. Sounds dystopian, right? But in exchange, you get free WLD, which is how this token enters circulation. It was founded by none other than OpenAI’s Sam Altman and already has been getting a lot of fanfare from the AI crowd. In contrast, many think it goes against crypto’s purpose of promoting people’s privacy.
Before you rush to buy it, though, I would note some glaring caveats. While the project took off remarkably fast, only 1.1% of the total supply is in circulation. This means 98.9% of the tokens are yet to enter the market, and that significant dilution is ahead. The price has been flat near the $2 range, so momentum isn’t on your side either through this dilution. The Whitepaper states that there would be 3.5 billion circulating tokens by year 3, which is quite a lot compared to its current circulating supply of 110.6 million.
With all that in mind, deciding if this dilution risk is worth putting your money into this project is up to you.
Emblem (EMB-USD)
Overline is another very ambitious project in the making. It is much smaller than Worldcoin, but one that I think can take off if whatever the developers are promising here comes to fruition. Emblem (EMB-USD) is the mining derivative asset of the project.
While the project mostly focuses on the metaverse, it still has a real-world product that piques my interest. The Overline ōRouter claims to allow Web 3.0 transactions and communication through the blockchain without an internet connection. Pre-sales are currently ongoing for these routers (I strongly recommend not entering these pre-sales), and I have doubts about whether this actually works. Small projects are notorious for false promises and I wouldn’t be shocked if it were the same case here.
However, if this does pay off, I can easily see Overline having a substantial valuation.
Nano (XNO-USD)
I’ve featured Nano (XNO-USD) in many of my articles, and I believe it fits well here too. It is a feeless decentralized peer-to-peer network with much potential to deliver multibagger returns in the long run. There’s no inflation here and, if crypto becomes a mainstream payment method, I expect Nano to surge. I’ve been more optimistic here recently, mostly because its peer coins like Bitcoin Cash (BCH-USD) and Banano (BAN-USD) have both climbed recently. Nano can replicate that price action.
I believe it is at the trough as it has stabilized at a market cap below $100 million, far below its peak of $1.5 billion in the latest bull run. I see it going much higher in the next bull run as crypto users seek cheap pathways to transfer their holdings. Nano is perfect for that. But again, small projects have their own caveats — and Nano is no exception, as it does not support trendy things like smart contracts. Crypto exchanges also do not widely support it, and there is no marketing here either. It is a very decentralized and organic project, but that’s a pro, in my opinion.
On the date of publication, Omor Ibne Ehsan had a LONG position in XNO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
