Strategies to find coins that give disproportionate rewards-to-risk opportunities in crypto.

If you wanna make it big in crypto with small capital, you need a few bets that can give disproportionate reward compared to the risk you take. This ensures that you make returns that are magnitude of orders higher than profits of your usual trades. Finding such assets though, betting with conviction when found and holding them till the time your thesis gets played out is extremely tough, and it is harder in that order. Finding is tough, but betting with size is tougher and holding for the required time is probably the toughest. It's like climbing hard mountains, where each one produces more challenges than the previous one. But regardless, you need to play the game if you want to make it big.

Let's deep dive into a list of strategies that can make outsized gains.

Alpha comes from what normally, people cannot see. It's in their blind spot. Lets consider a few examples;

STRATEGY 1: RISE FROM THE ASHES

Assets that give a lot of pain: Star assets that rose too high, or were introduced at very high valuation kept bleeding for so long, investors lost all the money and capitulated. Like assets that go down 90-99% in the bear run. Most of such assets will fail. Like 99% of such assets will fail and never recover probably.

But those 1% or even less than 1%, where the team didn't give up and kept building, has the potential to go up quite a lot in the bull run. They go up a lot in value because they take market by surprise. Market had written it off but soon became valuable creating euphoric situation. These things don't get priced in easily. It takes time. So for weeks/months to come they are likely to give good returns.

The greatest example of this kind of an asset is $SOL. Investors capitulated on this one and most of them had written off their investments in $SOL after the entire FTX debacle and Sam's arrest. The asset bounced back from the ashes once market realized that $FTX did not equal $SOL.

One more asset that comes to mind while talking about turnaround is $OM. The asset crashed to almost 2 cents and then rode back up to $4 like going up almost 200+ times. (Although I am still not sure, what it does, lol...)

STRATEGY 2: FUTURE CATEGORY LEADERS

Every category shines at some point in time. And when it does, maximum gains are made by the ones leading that category. This is true for trading, investment or even businesses in general. You can see lots of such examples in TradFi. You must've heard this term, "Winner takes all." This is exactly what it means. NVIDIA gained over a trillion dollars in marketcap after AI boom. Rest of the AI /tech companies combined together did not even gain half of it.

Crypto is not eluded to this phenomena.

If you leave the majors $BTC and $ETH aside, $SOL has a marketcap of over 100B dollars. Rest of the L1 protocols combined do not have that much. This goes on showing the power category leaders have. If you look at the volumes traded on $SOL, rest of the chains feel dwarf chains.

Same thing goes with MEMES, AI, RWA or any other sector. Top 2-3 coins have 80% marketshare. Rest of the entire market scrambles over the remaining 20%. This 80:20 rule applies to even businesses. You will hear business owners saying, 20% of my clients pay for 80% of my revenue. 20% of my staff contributes more than the remaining 80% of the workforce and so on. This is probably how everything works.

Now that we understand the true potential of this idea, how do we unlock its benefits?

There is this podcast of Taiki Maeda with guest Nachi (@alphawifhat). He gave the reason of why he bought 4% of total supply of $GOAT and held on to it with conviction. $GOAT went from 0 to 1B in marketcap in just a matter of days. Nachi saw this coming and bought a huge chunk of the asset and held on to it. The bag is almost worth $40M. Every cent change in the price of $GOAT can affect hundreds of thousands of dollars in profit for Nachi. Yet he calmly holds it, because of the conviction he has in his bet. He explained the reason behind this. He said, AI-MEME coins is a new subsector that is emerging and $GOAT is leading this. Right not it is in price exploration stage. Nobody knows how big this becomes. But we all know how AI has swept the TradFI market, businesses and so on. AI-MEME sector will be huge in coming days. If the market becomes like a 100B or a trillion dollar market, $GOAT could pull multiple X's from current levels.

Nachi was succesful in spotting a new sub-category getting created and he took the opportunity to size it up. As witnessed in history, if winner takes majority share applies to this, he would retire his bloodline by this trade.

The first Coins/Assets/Stocks that literally build the category like how $doge built the memecoin category run the hardest.

These coins run exponentially. Key is to buy them cheap. Within categories, there would be sub-categories that you need to identify.

Like Memes is a larger category. But, can be subdivided into Dog memes, Cat memes, AI-memes, Serious Memes and and so on.

Next time when you see some token building a new promising category or sub-category, you know what to do...!

This also resonated with me quickly as it has been advocated by many successful veteran traders. I found this idea initially while reading Mark-Minervini's book, " Trade like a Stock Market Wizard"