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Crypto Mines: 7 Sketchy Coins That Could Wipe Out Your Wealth
While few sectors offer the exponential upside potential of the cryptocurrency market, not every idea is a winner, which brings us to the cryptocurrencies to avoid. I’m not here to criticize pet projects – do what you want with your money. That said, you need to understand the risks.
Virtual currencies – no matter how much attention high-grade coins and tokens have received – are incredibly risky. Due to the lack of extensive oversight and regulation, cryptocurrencies can be extremely volatile. This applies to both rises and falls, which makes it difficult to find your way around the sector.
By logical deduction, the further you stray from established names, the more likely you are to encounter problems. For example, it is not so uncommon for speculators to lose everything due to carpet pulling in the crypto space and other scams.
In this wild world, you have to look for number one. With this in mind, below are cryptocurrencies to avoid.
Shiba Inu (SHIB-USD)
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One of the most popular virtual currencies, Shiba Inu (SHIB-USD) has a loyal investor base. For those who know what they are doing, SHIB could be intriguing. However, just as a financial advisor would not recommend Forex trading to a beginner, I cannot in good conscience say that you should invest serious money in working with Shiba Inu.
Yes, it’s classified as number 11 in terms of market capitalization. It’s an impressive achievement, period. However, the problem is the dramatic variation in movement. For example, the gap between the 52-week high and low is almost 700%. If you were on the wrong side of this trade, you would have lost more than 87%. It would be extremely difficult to recover from such a loss.
It’s also worth pointing out that the high-low gap over the past 30 days has been nearly 59%. This is great if you are a disciplined veteran trader. But if you were on the wrong side of this trade, you would have a 37% loss.
With technical analysts warning of a possible failureSHIB is one of the cryptocurrencies to avoid for beginner investors.
Decentralized (MANA-USD)
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During the wild days of 2021, when virtual currencies could seemingly do no harm, I owned a few Decentralized (MANA-USD). I can’t really explain why I bought it because I simply don’t remember the details. Anyway, the price skyrocketed and I felt it was time to get out. Even though MANA is connected to the metaverse via its virtual reality platform, the concept seemed bizarre to me (once I realized what was going on).
Again, for those who know what they are doing, MANA could be an intriguing profession. But even veteran traders are likely interested in Decentraland to get quick scalps. According to CoinMarketCap, MANA’s all-time high was just cents away from $5. Coins currently cost less than 50 cents. Looking at the technical profile, it is unlikely that MANA will be able to return to the highest levels.
Furthermore, with the broader ecosystem undergoing a significant correction, Decentraland is suspect. If weak hands come out of higher level coins and tokens, presumably MANA has little chance. I would take a cautious approach. It is one of the cryptocurrencies to avoid.
Audius (AUDIO-USD)
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A few years ago, I remember Audio (AUDIO-USD) came across my radar as a highly touted virtual currency. It’s a fascinating concept. According to CoinMarketCap, Audius represents a decentralized music streaming protocol. It was “launched to address the inefficiencies of the music industry, plagued by opaque ownership of music rights and intermediaries who stand between artists and their audiences.” says the crypto-centric website.
Long story short, Audius has proposed a holistic way in which creative and innovative musicians can be rewarded for their work. At the same time, fans have exerted influence on this ecosystem, thus eliminating the complex relationships imposed by the contemporary music industry. He had the potential to be disruptive. Unfortunately, investors lost money and that’s really the bottom line.
You can argue all day that we need more decentralization in our lives, not less. Maybe. However, if Audius investor returns are the only thing that is disrupted – and not in a good way – AUDIO, the token has little chance of gaining credibility. Given the current situation, I think it is one of the cryptocurrencies to avoid.
Hexadecimal (HEX-USD)
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Designed in December 2019, the Hex ecosystem looks like a certificate of deposit on the blockchain. For CoinMarketCap“HEX is designed to be a store of value to replace the certificate of deposit as the blockchain counterpart of that financial product used in traditional financial markets.”
The crypto asset also highlights another intriguing attribute of the ecosystem. “HEX allows a user to stake their HEX coins for a share of new HEX coin issuance, or inflation, and contains features designed to incentivize behavior that encourages price appreciation and disincentivize behavior that encourages price damage.”
Specifically, the Hex smart contract “penalizes stakers for terminating their stake early and rewards them for staking larger amounts of HEX for longer periods.” This is the opportunity and the risk. On the one hand, if more people believed in the project, the staking process would yield greater financial rewards.
However, if Hex falls out of favor with investors, that’s it. Your stake could potentially expose you to deeper net losses. Due to the complexity of this project, it is safe to say that for beginners, HEX is one of the cryptocurrencies to avoid.
Floki (FLOKI-USD)
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I have mixed feelings about it Floki (FLOKI-USD). As a popular meme coin, it has significant potential, if only because its supporters don’t take “no” for an answer. Perhaps in any other circumstance, a niche project focused on the name (and breed) of Elon Musk’s dog would be derided as ridiculous. However, when you are in the blockchain, this is a good reason to justify a market cap of $1.6 billion.
Now, I understand that Floki implies much more than just the name. Proponents will argue that Floki offers utility in several ways, including the metaverse and DeFi applications. However, the point remains that this digital token has the same market value as real businesses – businesses that generate revenue and hire people. Said differently, Floki is where he is largely because people believe he will rise.
To be honest, this methodology – generally known as the great fool theory – can be a powerful catalyst in blockchain. However, this also necessarily means that Floki’s rating is weak. It will increase until it doesn’t anymore. For this reason it is one of the cryptocurrencies to avoid for new investors.
Terra Classic (LUNC-USD)
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Originally in development in January 2018, Classic Earth (MON-USD) initially began as a blockchain protocol that uses stablecoins backed by fiat currency to power global payment systems at stable prices, according to CoinMarketCap. It aimed to provide price stability and trust (via fiat peg) while offering lightning-fast transaction settlements.
What made Terra distinct (if not unique) was the fact that a complex algorithm underpinned the docking protocol. It all seemed fine and dandy until a catastrophic release occurred. Essentially, this development exploded the underlying blockchain ecosystem. It also cost investors billions of dollars. Unfortunately, when crypto projects go wrong, there is little to no recourse.
Following the disaster, the original Terra blockchain became known as what it is now, Terra Classic. Despite the turmoil and reputational damage, people continue to trade the asset. Given the extremely low price of LUNC – trading for fractions of fractions of cents – it continues to attract speculators.
My idea? Consider LUNC one of the cryptocurrencies to avoid. Although the original idea was innovative, it proved to be unfeasible. So, there doesn’t seem to be much point with Terra Classic other than wild speculation.
FTX Token (FTT-USD)
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You would think that bankruptcy and massive fraud would be enough to scare people away from crimson-stained cryptocurrencies. However, FTX Token (TTF-USD) – which is related to the deceased FTX platform – still trades in the blockchain ecosystem. According to CoinMarketCap, the price as of this writing is $1.47 per token. It boggles the mind.
On the other hand, investors in the fiat world have also speculated on similar circumstances. For example, when the cosmetics giant Revlon declared bankruptcy, many traders bought shares. Of course, that’s a risky idea because, in a bankruptcy proceeding, common stock shareholders are the last in line to receive something in the event of liquidation. However, if a bankrupt public company manages to strike a deal, the stock could skyrocket.
This may be the only reason why some choose to “invest” in FTX tokens. However, CoinMarketCap offers a clear warning: “FTX’s bankruptcy proceedings are ongoing. The FTT token no longer has any use and can be liquidated from assets to pay creditors. Please proceed with caution.”
You can guess my position. It is one of the cryptocurrencies to avoid.
As of the date of publication, Josh Enomoto 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 InvestorPlace.com Guidelines for publication.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major deals with Fortune Global 500 companies. In recent years he has provided unique and critical insights to the investment markets, as well as various other industries, including legal, construction and healthcare management. Tweet it to @EnomotoMedia.