Crypto investors are well aware of the risks associated with low-cap altcoins. However, this segment often offers impressive returns and may increase your investment several times.
So investors should start buying low-cap altcoins in July. Especially now that experts believe that the Altcoin season has begun.
Opportunities and risks for low-cap altcoin for the third quarter of 2025
Total market capitalization reached a new high in July, but capital flows primarily to Bitcoin and major altcoins.
The TradingView data supports this. The total crypto market capitalization is close to $4 trillion, but the market capitalization is only $15.4 billion, excluding the top 100 altcoins.
CoinMarketCap data shows that the top 100 Altcoins each have market capitalizations of over $700 million. Altcoins (less than $700 million) outside this group are classified as intermediate or low caps.
This capital disparity suggests investors are cautious. They prefer altcoins with high liquidity, as well as those found by institutional players and listed companies.
However, another interpretation offers hope. Some analysts believe that the current capital inflow is still in its early stages.
Many analysts share the same views as investor Mr. Crypto. According to them, the market is still in phase 2. At this stage, most investors prefer Ethereum. Capital eventually spins into large, medium, and low caps.
This delay creates a window into the opportunity for many investors to buy at a good price early. It also provides an opportunity to preempt the wider capital flows.
Still, analysts like João Wedson remain skeptical of Ultra-low-Cap Altcoins, especially outside the top 300. These coins typically have a market capitalization of less than $200 million. He cites the ratio of market capitalization to open interest as a warning signal for these coins.
Data shows that open interest in the outside coins in the top 300 is unusually high compared to market capitalization.
When open profits are significantly above market capitalization, this indicates that traders are focusing on the short-term movements of the derivatives market rather than actively trading tokens in the spot market. As a result, these altcoins experience low liquidity and encounter extreme volatility.
“From the top 300 down, open interest is disproportionately higher than market capitalization. This is a strong risk signal. What does this mean? These altcoins will ultimately liquidate 90% of the traders.
X has rapidly spreading excitement about the Altcoin season in July. However, whether investors should purchase low-cap altcoins in the third quarter of 2025 remains heavily dependent on individual risk appetite and investment strategies.
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