What exactly is a low-cap coin? A complete guide for newbies.

When you step into the crypto world, you will definitely hear the term "low-cap coin." However, in reality, there are surprisingly few people who truly understand what "low" means and what is risky.

Revisiting the Basics of Market Capitalization

To understand low-cap, you first need to know how market capitalization works.

Market Capitalization = Circulating Supply × Current Price

Here is a simple example. If there are 1,000 coins in circulation for project "A" and each coin is 100 dollars, then the market capitalization is 100,000 dollars.

Classifying Three Caps

Top Cap: Market capitalization of over $1 billion

• Major coins like BTC and ETH
• Liquid and relatively safe
• However, explosive price increases are unlikely.

Mid-cap: $100 million to $1 billion

• There is a possibility of a surge due to fund inflows.
• The balance of risk and return is achieved.
• Relatively friendly to new investors

Low Cap: Less than $50 million

• Low prices = easy to enter
• Low trading volume in the last 24 hours
• Low liquidity and high slippage.
• While it has dreams, it also has the possibility of disappearing all at once.

The Charm and Reality of Low Caps

Low cap coins allow you to dream of "striking it rich." Indeed, there is the potential for them to multiply several times to several tens of times. However, at the same time, there is also a high risk of projects being abandoned or falling victim to rug pulls.

In other words, if you jump in without any knowledge, you often end up getting burned. That's why it's extremely important to do your homework, such as reading the white paper, researching the development team, and observing the community's reactions.

Invest at your own risk.