Previous bull runs in the crypto market made many folks rich, fast. And as with any get-rich-quick scheme, the bottom tends to fall out at some point. Last year, many speculators and those using leverage in the crypto markets got wiped out trading in ultra-risky cryptos.
This year appears to be shaping up to be no different, with many ultra-risky cryptos seeing significant declines of late. Notably, some of these downside moves are being seen in less-speculative tokens of late.
That said, I think now is the time for investors to exercise caution and avoid certain investments. Some cryptocurrencies lack utility, possess questionable value, or face obsolescence due to advancements in the crypto industry. Here are three examples of ultra-risky cryptocurrencies that readers should steer clear of.
Dogecoin (DOGE-USD)
Dogecoin (DOGE-USD) has captured imaginations and displayed unmatched volatility. This meme-inspired cryptocurrency has garnered a massive following and is frequently discussed as an investment option.
Elon Musk’s playful engagement with Dogecoin comes as no surprise. His quirky sense of humor and controversial actions keep the market excited. From temporarily featuring the Dogecoin logo on Twitter to making announcements, Musk consistently affects Dogecoin’s price. His influence has thrust Dogecoin into the spotlight, and investors eagerly await his next move. Dogecoin’s value cannot solely rely on entertainment within its ecosystem. While the usual discussions revolve around potential high returns, it’s important to recognize that blockchain technology goes beyond extravagant claims and focuses on tangible benefits.
Dogecoin exemplifies the unpredictable nature of speculative cryptocurrencies, highlighting their untamed potential. It leaves skeptics and believers alike questioning if these digital assets can truly lead to wealth. This makes Doge one of these ultra-risky cryptos to avoid.
Shiba Inu (SHIB-USD)
The narrative surrounding Shiba Inu (SHIB-USD) lacks compelling substance. It revolves around a dog-themed token that gained temporary popularity during the pandemic-induced excess. However, as the market conditions shifted and interest rates rose, Shiba Inu’s performance plateaued. The initial hype has faded, leaving investors with limited growth prospects. It’s important to recognize the risks associated with Shiba Inu, despite its past gains.
Avoid Shiba Inu, the hottest digital currency of 2021, as it experienced an astronomical rally of over 121,000,000% between January and October. Despite a remarkable increase, investing in SHIB tokens is not recommended for the new year, considering its volatile nature and exaggerated gains. By the end of 2021, SHIB coins had still achieved a significant surge of around 46,000,000%.
Moreover, it experienced significant retracements of over 90% from its all-time high of $0.00008841. It is likely that 2023 will follow a similar pattern. The major challenge for Shiba Inu is its lack of competitive advantage or uniqueness. Being an ERC-20 coin on the Ethereum blockchain, it essentially functions as a payment coin without any distinct features or differentiation.
Floki Inu (FLOKI-USD)
Following the footsteps of Dogecoin and Shiba Inu, Floki Inu (FLOKI-USD) joins the meme coin realm as one of the latest entrants. With a Shiba Inu dog (once again) as its symbol, Floki Inu has quickly gained immense traction, standing out from other meme coins with its unique combination of meme appeal, utility, and philanthropic initiatives.
In May, FLOKI experienced a significant surge, gaining over 40% in market value. This positive sentiment also had a ripple effect on other cryptocurrencies, including the well-established Bitcoin. The trust placed in FLOKI reflects the broader trust in the crypto market, as evidenced by its coverage in business news outlets.
FLOKI, the token of the Floki Inu project, operates on Ethereum and Binance Smart Chain. Bridging between the two chains is effortless due to its compliance with ERC-20 and BEP-20 standards. Notably, FLOKI’s value is susceptible to the influence of high-profile individuals like Elon Musk. Elon Musk’s tweets can trigger rapid price fluctuations, making FLOKI one of the most volatile cryptocurrencies with a currency volatility index of 13%. However, unlike Shiba Inu and Dogecoin, FLOKI may require additional technical solutions for long-term price stability.
On the date of publication, Chris MacDonald did not have (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.