Duplicate What Works
In the world of investing, adding to your winners is a pretty solid investment approach to practice. An asset that is performing well is a good option for additional allocation. Buying corrections makes the most sense. Similarly, duplicating what is working well is another strategy that stems from a similar form of wisdom. If an approach is performing optimally, look to multiply and increase its efficiency and profitability.
I have always avoided memecoins, until more recently, when I managed to uncover BONK before its meteoric rise. This then led to HUSKY and has since encouraged me to consider identifying a memecoin for many of the leading chains. At this stage, I have exposure to memecoins on Solana and Avalanche. Generally speaking, memecoins that survive usually thrive. Over the long term, they tend to perform surprisingly well, and so a modest investment makes sense.
Even with the recent dip, which hit memecoins fairly hard, my BONK position is still 2000% in the green. Consider for a moment what this figure will be in a year or two. And so, gaining a little exposure to particular blockchains by investing in memecoins is a strategy I am now actively engaged in. Needless to say, this particular approach does not replace my penchant for uncovering micro-cap gems. However, it is another viable angle to approach this market.
Due to this particular sector being incredibly risky, the risk/reward ratio does favor smaller allocations of capital. Essentially, investors can be well positioned without incurring much financial risk. This must remain the case. Anyone who chooses to deploy boatloads of capital in the memecoin market is asking for trouble. For example, my initial investment in BONK was financed by a passive income stream.
This is an ideal situation. Essentially, I was able to gain exposure to a high-yielding investment vehicle without any significant risk. I was able to remove the risk aspect from the ratio, and so was only left with that of reward. I highly recommend passive income models as mechanisms to gain investment capital. It takes a lot of the pressure off, as potential losses are now a lot less damaging. In other words, if I gave you investment capital, there would be no risk on your part, right?
That’s pretty much what passive income models do for you… they continue to supply investable income, free of charge. It’s money that you did not have to work for and doesn’t come out of your salary, or monthly earnings. I utilize passive income for risky investment vehicles. Once again, I am always seeking to enhance my risk management practices. Better risk management ultimately means greater and safer profitability.
Memecoins On My Radar
Currently, I am keeping an eye on Polydoge and PandAI. Polydoge is a Polygon-based memecoin, and PandAI is built on BSC. Both of these memecoins are still flatlining with very modest green movements over the past month or so. Market cap valuations are below $10 million, and so the risk/reward ratio is pretty attractive in both scenarios. I may or may not abandon these coins. However, I first need to see some decisive movements in the price action.
I am only interested in memecoins below $30 million, and the lower the better. Here’s the reasoning, if BONK goes on to 10X from its local top over the next two years, my BONK investment will be up 300X. As I have said many times…
It’s all about the entry point.
Do everything in your power to identify tomorrow’s winners as early as possible. It’s all about the alpha… nothing else matters. Another benefit is the obliteration of potential loss. An asset that has surged 30000% can never incur a loss. An investment that surges 30000% and then incurs a 90% correction is still up 3000%.
Investors need to play around with the numbers, relativity ratios, and risk/reward ratios if they are to fully comprehend the opportunity they are handling. This “familiarity” nurtures strategic creativity. Quality micro-cap projects will most likely always be my primary focus. Playing around with memecoins is just another fun way of realizing alpha.
Final Thoughts
I have also added several more obscure memecoins to my watchlist. So, if you think the abovementioned tokens are risky, these are even more dangerous, and simultaneously, potentially profitable. Remember, the beauty of high risk implies minimal investment capital, and can always be increased in the event of a strong rally. See you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
