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What I’m buying: Micro-caps edition

What I’m buying: Micro-caps edition

I haven’t done many trading updates of late, largely because the ICO market has died a death and without that churn most cryptoassets are in holding patterns — indeed, a lot of what I own has been at pretty much the same ETH ratio for the past few months now.

That said, over the past month or so I have been moving into alts I consider to have been dragged down by the general market malaise but which never had a boom in the first place or which have been worst hit. As such, I’ve been moving into the micro-caps. I have discussed before the fallacies of relying on market cap, as many projects game the system and history have shown that projects with larger market caps are no more trustworthy than those with small ones.

The plan has essentially been two-fold, targeting projects with:

  • Limited liquidity to capitalise on market takers who are forced to sell and buy at rates often substantially different from the ‘norm’

  • Low market cap in which it is possible to purchase a significant amount of the supply

I’m not going to insult anyone’s intelligence by talking about fundamentals or great team or solid community — these are just projects I’ve followed on and off and think should be comparable market cap wise to much larger projects. But again, that is a reflection of the stupidity of most valuations and market cap as an investors tool rather than any conviction in the project (with the exception of one, which I happen to like very much). If you want technical/fundamental analysis or in-depth breakdowns of projects then this is not the post to read, because this is very much a lazy ‘this is what I’m doing’ post rather than ‘this is why I’m doing it’.

With that in mind, the four I’ve been mainly acquiring are:

Auctus

I wrote about Auctus a while ago as I contributed to the ICO (which only raised $3.8m in April) and have traded it on and off since, buying at 0.00014–6 and selling at ~0.00026 back in August before again buying on the 21st October at 0.00016–7. Despite the 50% rise since then, market cap remains at c. $850k. It’s still down 50% from its ICO price vs ETH, 81% vs USD. I’ve trialed the platform, it’s ok — a lot of work needed on it. You get 1,000 AUC for referring someone to it. AUC token is useless and lots of competition so obviously long term probably not something you want. Benefits from a listing on Bitfinex, which is unusual for such a low cap.

Etherisc

Another one I’ve written about before and contributed at ICO, I noted back in July “I plan to invest with the view to hold for a minimum of six to eight months. I would not invest if you only want a quick flip as I think this could be a slow burner — there is no real hype around Etherisc right now.”

Etherisc has been a disaster since ICO and has now fallen to a market cap I believe (it isn’t listed on CoinMarketCap) of c. $170k at today’s prices, although that is down 70–80% since earlier in the week. Again, volume is non-existent so even small sell orders are clearing out the order book.

Etherisc was always a project I invested in because I liked it rather than necessarily thought it was an amazing financial proposition. The team have piloted some of their insurance solutions, are working with Oxfam and appear (always hard to tell) focused on the development rather than marketing (alternatively they’re just doing nothing as there is literally no marketing).

I’ve been swing trading DIP for the past few weeks and have been scalping 20–50% per trade (again, very limited liquidity). I got caught out in the price falls this week (which combined with the ICO allocation has erased any profits I’ve made) and have gone from buying at 0.00008 and selling at 0.00011 to a buy at 0.00008 being down immediately 40% and a buy at 0.00005 similarly immediately being down 40% as my buy order at 0.00003 went through simultaneously. Many days I have essentially been the market, being involved in every trade on one side. Today’s high is double the low, to give you an idea of the current spread.

My worry is also that the floor is quite hard to define, given early buyers of DIP bought in back in 2016. It adds a very different dynamic to other, newer projects. Furthermore, a lot of buyers locked their tokens up for 12 months, meaning that in July next year the supply will more than double — something to be aware of (and highlights another flagrant issue of relying on market cap).

Again, I think it is a project which has the ingredients to quickly increase once people ‘discover’ it. The team have been around a long time, they have working products, it’s a sector well suited to blockchain, it’s down 80% vs ETH from ICO — and you can buy 1% of the market cap for less than $2k. It’s the exact sort of project I like.

Devery

Devery is another I’ve kept an eye on for a while. It launched in January, raising $10m in its ICO but as recently as last week was hovering around the $1.4m mark (c. $2.4m today). Bought at 0.0001–12 a few weeks ago, up to 18 at present. People have always loved supply chain projects. Volume is low mind, don’t be fooled by the Hotbit volume — its all bots. I was waiting 2 days for a reasonably small order to get filled.

Leverj

Volume on Devery is low, but volume on Leverj is non-existent — $1,500 in the last 24 hours. Basic rationale was that I’m expecting the wider launch of Plasma to generate associated benefits for all Plasma projects (such as Leverj). In all honesty this is one I want to exit fairly quickly. Bought at 0.000091–98, it’s essentially still at that level. I am undecided about just selling out at this point at break-even.

There are a few others I’ve been keeping an eye on/hold small amounts of like OneLedger (OLT) and Tolar (TOL), both hyped ICOs which are c. $2.5m and well down from their respective raises. Oh and I still own Ethorse. Volume is $4 today, so it’s absolutely flying. I also forgot to claim my dividends for last quarter so can’t even point to the great ROI I’m getting from dividends. They also implemented some mental new community token which is incredibly confusing and seems to have no point to it. I’m really hoping they’re focusing on getting it on Status/Coinbase Wallet because it desperately needs it — I still have a soft spot for the project.

As always, remember I do hold a healthy amount of BTC to counteract holding such micro-caps. These are just what I see as relatively good short term bets, given how many alts are currently pumping (and yes they’re still far off ATH, but that doesn’t preclude those buying at the bottom from making sizeable profits). Other main holdings are TFD and ELEC. TFD has held up well, ELEC has been a trainwreck albeit seems to have stabilised somewhat. I still think there is something off with the project so I’m just looking to exit that as soon as possible.

This is such a shoddy uninformative article that I am tempted just to delete it but I’ve had complaints that I now focus solely on tech and have lost sight of the shiny micro-caps so…

ConsenSys: Understanding one of the most important firms in crypto

ConsenSys: Understanding one of the most important firms in crypto

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