Despite the cryptocurrency sector’s resilience, it now faces a challenge posed by the Federal Reserve’s potential interest rate hikes.
The recent June jobs report did not fully convince the Central Bank to forego such hikes. This could potentially trigger a risk-off cycle and create obstacles for virtual currencies. While the Fed’s decision remains uncertain, disappointing employment figures and persistent wage growth indicate a scenario where more dollars chase after fewer goods.
In this context, it is wise to be cautiously optimistic and prepare for potential difficulties. Here are three cryptocurrencies that you should not invest in right now due to their lack of fundamentals and hype-induced valuations.
Dogecoin (DOGE-USD)
Once a prominent meme coin in the crypto space, Dogecoin (DOGE-USD) experienced an astronomical surge of 26,000% between May 2020 and May 2021. While its popularity has waned in recent years, Dogecoin still maintains a dedicated fanbase. Some cryptocurrency enthusiasts anticipate a potential resurgence. True, it can be appealing to purchase at the current lower price levels.
Dogecoin has experienced a significant price decline, dropping nearly 90% from its peak in mid-2021. Other cryptocurrencies such as Ethereum or Solana offer smart contract platforms or stablecoins backed by assets. However, Dogecoin lacks intrinsic value or utility within financial systems. It has limited merchant acceptance as a form of payment.
Dogecoin, currently priced at 6.5 cents, recently fell below its 50-day moving average (6.7 cents), raising concerns about its price action. The upcoming Fed decision could further impact Dogecoin, as it is considered one of the riskiest assets in the speculative crypto market. While sentiment-driven gamblers may still show interest, conservative investors have a more modest take. They want to exercise caution and wait for clearer signs before considering an investment.
Pepe Coin (PEPE-USD)
Pepe Coin (PEPE-USD), surpassing Dogecoin in volatility, has gained investor interest as a meme token. With no practical use, its price has experienced extreme fluctuations in its short existence. Over the past year, PEPE has seen a staggering rise of nearly 2,650%, yet it currently trades at fractions of a cent. The cryptocurrency’s price can swiftly rise or fall, making its volatility truly remarkable.
Pepe coin’s decline can be attributed to its lack of practical use, limited to being a novelty meme-based currency. In contrast, other meme coins stand out by offering a platform with real-world value and potential. This is particularly true within the vast real estate industry.
Moreover, Pepe lacks utility and innovation, relying solely on meme coin popularity and internet nostalgia. Its price is driven by speculation and subject to extreme volatility and manipulation. Pepe has already experienced a significant decline of over 64% from its all-time high. Legal issues may arise as the original creator of Pepe the Frog, Matt Furie, has sued other projects for intellectual property infringement. Objections from Furie could deter major exchanges from listing Pepe.
Axie Infinity (AXS-USD)
The once prominent crypto player, Axie Infinity (AXS-USD), now faces substantial uncertainties. This could signal a prudent time to consider exiting AXS token holdings.
The decline of play-to-earn (P2E) decentralized applications (dApps) and the detrimental hack on its parent chain in March 2022 have dampened Axie’s prospects. The substantial financial loss from the cyber theft has impacted the Axie ecosystem, leading to a decline in active addresses on the platform. Moreover, the potential classification of AXS as a security by the SEC and ongoing regulatory pressures contribute to the uncertainty surrounding its future demand and liquidity.
The price of AXS has fallen by over 36% in just two weeks, reaching near two-year lows. The SEC’s classification of AXS as a potential security has contributed to this decline. Pending court decisions, potential regulatory changes, and the risk of delisting from U.S. platforms pose risks to AXS’s demand and liquidity. Therefore, caution is advised for AXS token holders as regulatory developments unfold.
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.
