Crypto trader and influencer Lark Davis is sharing his low and high-risk techniques to spot the next big movers in the altcoin market.
In a new video, Davis tells his 183,000 YouTube subscribers that some investors are missing out as altcoins have been quietly making significant gains in the last few months.
“Some people have been sitting around waiting for the magical altcoin season to happen when in truth, altcoin season has been happening for a like a freaking year now. Altcoins have been making crazy returns for investors way beyond Bitcoin has been giving to investors.”
For investors who are looking to hop on the altcoin train, the trader tells his audience to look at coins with a market cap of $100 to $200 million as they offer the best risk-reward ratio. These projects typically have working products and growing user bases but have limited market reach.
Davis adds that solid projects such as Aave can exponentially grow without a significant pullback. In such cases, the analyst suggests looking at the fundamentals of the protocol.
“Focus on the fundamentals. That is what is going to bring you in those gains. Look for that strong economic token model, which Aave has. Look for original ideas [and] powerful technology, which Aave has. Look for a strong team, which Aave has. Look for good total value locked. It’s one of the top leaders. Understand if the model is sustainable. They’ve got a pretty simple business model. Understand how the remaining token releases could affect the value of the tokens that you buy… Always find out, too, if you can farm the tokens for free.”
Davis highlights that while middle cap coins will likely not generate 100x returns, he says they have to potential to print gains between 20x and 50x during this bull run.
As for opportunities to earn 100x returns, Davis recommends scouring coins with a market cap of less than $100 million. He notes that although these projects offer maximum potential for gains, they also come with extremely high risk.
“You either lose a truckload of money or you make a truckload of money.”
When investing in low-cap coins, Davis tells his audience to practice risk management techniques to protect their capital.
“One of the easiest ones that you can do to minimize your risk when playing with these kind of coins is to keep your position sizing low… What I usually do is I put like 1% of my portfolio into these low market cap coins… You really have to think twice before considering bigger allocations into these high-risk coins because things can go very bad very quickly.”
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