Think Small-Caps Are Set to Take Off? Here Are Some Expert Crypto Tips for 2026

Forget traditional small-caps—the real alpha's brewing in crypto's under-the-radar projects. While Wall Street obsesses over market caps, decentralized networks are quietly building the next financial infrastructure.

Spotting Tomorrow's Giants

Look beyond the usual suspects. The next wave isn't about who's already on top—it's about protocols solving real problems with elegant code, not just marketing hype. Liquidity, developer activity, and governance token utility separate the contenders from the vaporware.

Niche Domination Over Hype Cycles

Find projects owning specific verticals: decentralized physical infrastructure, modular data layers, or cross-chain interoperability solutions. These aren't just tokens; they're digital economies with flywheels that spin faster as adoption grows. The tech either works at scale or it doesn't—no quarterly earnings calls to obscure reality.

Risk Adjusted for the Digital Age

Diversification here means spreading across technological approaches, not just sectors. Allocate like a venture capitalist, but with the exit liquidity traditional VCs envy. Remember: in crypto, your 'small-cap' can become a foundational layer—or vanish faster than a banker's promise during a margin call.

The smart money isn't waiting for permission. It's building the rails while traditional finance still debates the gauge of the track.

Key Takeaways

• The Russell 2000 and the S&P 600 have risen more than 4% in the first few trading days of 2026.
• A BofA Global Research screen turned up 30 stocks with 12-month price targets that imply average implied upside of almost 30%.

The stock market's underdogs may be ready to lead the pack.

Small-caps—generally, companies with market capitalizations between about $250 million and $2 billion—are poised to outpace their larger peers this year, Wall Street analysts say. The group's early 2026 outperformance supports that view: The S&P 600 and the Russell 2000, benchmark indexes for that category, have risen more than 4% year-to-date, outpacing the broader market.

This may sound familiar. Market strategists have asserted that smaller companies were due to trounce their larger peers time and time again in recent years—then seen them struggle to do so. This year, experts see the stars aligning to support a long-awaited boost for the category: earnings are set to rebound, monetary policy is more accommodative, and there's the possibility that some tariffs are taken off the table.

WHY THIS MATTERS TO YOU

Large-cap stocks have produced outsize returns in recent years. Some strategists have been forecasting a shift, with gains spread out across more of the market.

"Earnings outperformance should drive small caps to lead," wrote Jill Carey Hall, Bank of America's head of U.S. small- and mid-cap strategy, last month.

In a follow-up report published Friday, she offered a list of 30 "smid-cap" stocks whose 12-month price targets imply average upside of almost 30%.

Hall said that about 90% of the stocks on the list saw upbeat consensus earnings-per-share revisions over the last three months, with median growth projections for the next 12 months at 23%.

Related Education

Separately, the bank's economists expect three rate cuts between now and the end of the year; lower rates are generally viewed as good for the group, because they tend to carry more debt than larger companies, meaning they are poised to benefit when interest rates and related expenses fall, boosting bottom lines.

The bank's best ideas for the size segment includes airline operator Alaska Air Group (ALK), shoemaker Birkenstock (BIRK), educational tech company Duolingo (DUOL), makeup and skincare purveyor e.l.f. Beauty (ELF), beverage shop Vita Coco (COCO), and home goods e-commerce retailer Wayfair (W).