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Meme Coin Investing 101
1000x Potential (Or Lose It All)
1,373 Words | 5 Min 54 Sec Read
Welcome to another issue of Passionate Income.
Today we’ll be discussing how to trade micro-cap crypto tokens.
With the potential to hit a 100x or even 1000x, this is where the most highest returns are to be made in the entire industry.
But with scams galore and investing themes that change on a daily basis, it's easy to lose your money. So in today's issue, we'll show you how to approach micro-cap investing the smart way.
Let’s dive in.
Huge Warning: What we'll be talking about today is incredibly risky.
You should assume that if you embark down this path, you could (and will likely) lose 100% of your investment. This information exists for entertainment purposes only. Nothing here should be considered financial advice. If you invest based on this newsletter and lose your money you deserve it LOL
During the 2020 / 2021 crypto bull run I made pretty good returns for a total beginner. But in all honesty, I had no idea what I was doing.
So when things started heating up again in October, I decided I would do things right this time and get professional help.
Since then, I've gone deep down the rabbit hole. To the darkest corners of what is already a completely degenerate industry.
And you know what I found at the bottom of the this damp, dirty barrel?
Micro-Cap tokens.
AKA Meme coins.
AKA these things have literally zero societal value and exist purely for degenerates to gamble on.
I emphasize the word "gamble" on purpose.
Mainly because investing involves putting money into legitimate assets that could go up over time based on their fundamentals.
Micro-cap tokens, on the other hand, have no redeeming qualities whatsoever. They exist purely for people to speculate on.
So why is such a refined, sophisticated newsletter like Passionate Income (LOL) writing an issue about shit coins?
Because they are the fastest way on planet earth to make serious money.
Period.
And because of that, you'd be shocked to know how many millionaires play in this playground.
It's not exactly something most people are proud of. And you would never list it on your resume when applying to a stock trading or investment banker job.
But for better or worse, there are people making 2x, 5x, and even 10x gains in a matter of hours. And if you hit it right, you can quite literally make 100x and 1000x type gains.
So how does the meme coin casino work?
First, understand 99% of meme coin traders play on the Solana or Base blockchains. There's an infinite number of blog posts and YouTube videos surrounding both so we're not going to dive any deeper here.
If you don't know how to get money on SOL or BASE already, rest assured this is not a road you should be going down.
Second, understand narratives are everything.
For example, when the GameStop and AMC stocks exploded last week off the back of Roaring Kitty returning to Twitter/X, meme coins / micro-cap tokens related to GameStop, AMC, Roaring Kitty and most anything or anyone related to the GameStop saga exploded virtually overnight.
You can think narratives as whatever the crypto community is focused on at any given time. As I write this, the GameStop narrative has already died off despite it being less than one week old.
As of this writing, monkey coins are the hot thing. And within the next 24-72 hours, it's entirely possible some new narrative takes over.
Further, understand there are micro and macro narratives.
One example of a macro-narrative is that of Politifi, which referes to Political Finance. Admittedly, what this really means is that there are bunch of meme tokens related to Trump, Biden and the USA.
But because many Politifi tokens launched months ago, and because the election isn't until November, Politifi tokens would be considered a macro-narrative (given their lengthy timeline).
On the flip side, the current obsession with monkey coins is a micro-narrative that will likely only last for a few days.
So if you're going to gamble, understand which is which and adjust your trading strategies accordingly.
Third, getting in early - when a coin is brand new / has a very low market cap - is of extreme importance.
So how low is low?
I like to use the 5% rule.
Meaning, if the token has the potential to reach a $1M market cap, ideally you want to get in before it rises about a $50K market cap.
Same goes for if something has a $20M MC, you want to get in before $1M.
Mainly because most of these coins, and especially the micro-narratives ones, will die within 24 hours.
Meaning, you want to invest upon the token's launch, hold onto it for a few hours while it rises, then immediately flip it and get out.
Which raises another question: How can you implement the 5% rule if you don't know what the coin's future market cap will be?
In general, we approach this by making estimates regarding:
What market cap recent launches have reached
The market cap of any previous tokens the founders have launched
What market cap similarly themed tokens have reached
And sentiment surrounding the crypto market on any given day
As you can imagine, executing on the above involves doing research and having general knowledge of the industry.
Fourth and last, you have to manage your cash flow.
While there are different trading strategies, the #1 rule in crypto is:
"Don't invest what you can't afford to lose."
And when it comes to meme coins, truer words have never been spoken.
See, most shit coins are pump and dump plays. Meaning they launch, run for anywhere from a few minutes to a few hours (or in some cases a few days), then die out.
At the same time, a huge percent are outright scams where the founding developer owns a large portion of the tokens and sells them all (“dumps them”) as soon as the market cap of the token reaches X amount.
And because of that, many liken meme coins to a game of musical chairs. Wait too long to sit down (exit your trade) and you lose.
At the same time, there are plenty of stories of people who sold too early only to watch the coin go up another 10x (or even 100x from there).
So having a strategy for selling your tokens (quite literally known as a Take Profit Strategy) is critical to your success with micro-cap coins.
In conclusion, what I've just explained is the tip of the iceberg.
The Meme Coins 101 version.
In reality, most people who dabble in meme coins lose money.
And the people who succeed approach it like a job, working long hours, tracking and learning from their successes and failures, and networking with people in the industry.
So don't think you're going to throw $100 into some random meme coin launch and make a $100,000. In reality, if you don't take it serious, what's more likely is that you'll lose the full $100.
With that said, I myself have made some decent returns doing this. And I've also missed out on some 100x and even 500x gains (because I sold too early).
In all honesty, trading these is an emotional rollercoaster that requires you to override your brain's natural preservation instincts. It can be also be highly annoying to have to stay glued to your screen while you’re in a trade (given the risks of a project collapsing on a moment's notice).
But if you have the time, emotional control, risk tolerance and capital, there's no denying you can make some serious returns with micro-cap tokens.
And if you decide to go down this path, don't say we didn't warn you.
💡 Takeaway: Micro-cap provide both extreme returns and extreme risk. While some people make millions, the overwhelming majority lose. However, when done right (and safely), micro-cap coins can be huge money makers.
🎁 Resources:
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