Small-cap cryptos should be on your radar if you’re an investor with a high tolerance for risk and an appetite for potentially astronomical returns. While the broader crypto market remains subdued, the next altcoin season could emerge at any time – and that’s when these little-known digital assets come alive.

Last cycle, we witnessed obscure altcoins deliver triple and even quadruple-digit percentage gains almost overnight. Finding the next hidden gems takes research and patience, but the rewards can be life-changing if your bet works out.

Of course, only calculated risks should be taken when dealing with such volatile assets. The crypto space is rife with scams and failures, so you must separate the wheat from the chaff. But with some diligent digging, you can uncover real crypto diamonds in the rough. Let’s take a look!

Sonorus (SNS-USD)

AI cryptos like Sonorus (SNS-USD) have absolutely gone parabolic in recent weeks. With a tiny market cap of just $15 million, I think SNS has massive upside potential ahead. However, dilution could be a concern down the road, as 60 million tokens are currently circulating out of a maximum supply of 1 billion. That full supply likely won’t enter the market anytime soon, but it’s still something to keep in mind. I don’t view these small altcoins as long-term holds by any means – the goal is to take profits when they spike.

What makes Sonorus intriguing is that it stands at the leading edge of innovation in the music industry. The project seamlessly integrates AI and blockchain to transform how music is discovered, voted on, created, and monetized. Sonorus has a model called TrendFi, merging music trends with DeFi rewards to incentivize engagement. Central to this project’s model is BeatMint AI, another feature allowing users to generate unique musical compositions through simple prompts.

Sonorus has surged 650% since early March, and has doubled in just the past week alone. This parabolic move signals that the crypto community is taking notice of Sonorus’ immense potential. I believe this surge is still only in its early stages for this tiny altcoin, as the buzz continues to build around its unique model.

Alephium (ALPH-USD)

Alephium (ALPH-USD) has pulled back recently after its powerful rally, presenting an attractive accumulation zone in my view before the next major leg higher. With similarities to Kaspa (KAS-USD) in providing scalability and efficiency for DeFi apps, Alephium boasts a very capable developer team.

Many existing blockchains like Ethereum (ETH-USD) face congestion and high fees that hinder certain applications from functioning smoothly. This is the problem Alephium aims to solve. It is a sharded layer-1 blockchain delivering scalability, security, and efficiency purpose-built for DeFi and dApps. Alephium uses a unique stateful UTXO model that matches Ethereum’s account-based programmability, while boosting security. But what really makes it stand out is its novel Proof-of-Less-Work consensus that dynamically adjusts mining difficulty to slash energy use compared to Bitcoin (BTC-USD).

After trading around just 20 cents last year, ALPH skyrocketed to nearly $4 at its peak – a 20x gain. This meteoric rise follows in the footsteps of Kaspa, a crypto I’ve covered since it was fractions of a penny and went as high as 18 cents with a $4 billion market cap. Alephium rode Kaspa’s coattails as both target scalability and efficiency issues for DeFi. However, Alephium’s market cap is still only $209 million compared to Kaspa’s $3 billion, despite comparable tech. This leads me to believe ALPH could still deliver multi-bagger returns from here.

DevvE (DEVVE-USD)

DevvE (DEVVE-USD) aims to be a high-throughput layer-1 blockchain tailored for institutions and enterprise use. Its technical whitepaper is bold, claiming the network can process up to 8 million transactions per second with sub-second finality. Validating these incredible throughput numbers will be crucial.

I’m watching the launch of its public testnet in March closely. This will be a major catalyst that could send DEVVE surging higher if it lives up to expectations. I believe DevvE has serious multibagger potential if it wins over institutional investment. Its ESG focus is another major plus.

One risk to note is the token dilution from early investors before launch. With only 18.7 million tokens circulating from a total supply of 300 million, DEVVE faces overhead selling pressure. This has rejected rallies above the $2 level multiple times already.

I’d caution waiting for an ideal entry below $1.20 due to this dilution overhang. While these locked-up tokens won’t get released all at once, steady selling pressure could mute DEVVE’s gains in the short term. Proceed with caution, but keep this on your watchlist.

On Low-Capitalization and Low-Volume Cryptocurrencies: InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More: How to Avoid Popular Cryptocurrency Scams

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.