Many crypto projects certainly display a degree of shadiness. Within the realm of high-risk cryptos, there are a number of projects investors can point to as rug pulls, or complete losses, that do keep some investors up at night.
Many meme projects and those that shot to fame in short order have seen stark declines in the past. These are the kinds of cryptos many investors who are concerned at all about capital preservation may want to consider avoiding.
The thing is, there are so many meme tokens out there to choose from, and I’m not going to suggest all are headed toward zero over time. But until certain projects provide real utility to end users, it’s hard to see a rationale behind owning many of these tokens.
Let’s look at three large-cap meme projects that should be put in the high-risk cryptos bucket and are worth avoiding right now.
Pepe (PEPE-USD)
Pepe (PEPE-USD) is among the top 25 cryptos ranked by market cap at nearly $4 billion, which is a steep valuation. Despite a 23% correction last month, this token has still surged 503% over the past year.
Thus, many meme stock investors may continue to hold this digital asset, given its previous returns during this bull market cycle.
The thing is, Pepe’s unattractive tokenomics is among the key reasons investors ought to be wary of this token. Currently, this project has a total supply of more than 420 trillion. While whales continue to trade this token, most of the recent transactions have been out of Pepe and into other large-cap tokens such as Ethereum (ETH-USD).
If this trend continues, you could expect to see further declines on the horizon as whale activity picks up. With more than 1 trillion tokens dumped on centralized exchanges during a recent session, Pepe has seen double-digit single-day declines. That could become the norm in the next bear market, if this sort of volatility continues.
Shiba Inu (SHIB-USD)
Meme coins like Shiba Inu (SHIB-USD) have clearly attract large communities and are projects that have retained their strong initial backing. Of course, basing an investment decision on how much one likes a particular dog meme isn’t necessarily a strategy that’s likely to be taken on by most rational investors.
But it’s clear that during times of market irrationality, Shiba Inu has seen huge upsides.
Recently, this token has declined more than 50% from this year’s earlier peak as weakening technical fundamentals and waning demand has seemingly taken hold.
Other meme tokens are becoming more interesting to traders, who have a focus that tends to shift from one token to another. Whatever is hot goes up, whatever isn’t gets pushed to the wayside.
With an increasingly large number of options for speculators to choose from, Shiba Inu is among the high-risk cryptos that is worth avoiding right now.
At the end of the day, there’s competition for speculative capital. In the crypto space, it may seem like capital is unlimited, but retail investors who may be forced to pull back on their speculation to pay their bills may soon find that negative momentum can build.
If that’s the case, Shiba Inu could have significant downside from here, given how far it’s already run.
Dogecoin (DOGE-USD)
Considered the grandfather of the meme token movement, Dogecoin (DOGE-USD) is another project that’s seen steep price swings despite its strong community. This token dropped 9% over the past week to trade below the 15 cent per token level.
Despite a market capitalization of more than $15 billion, it’s a project that could see the same fate as the two aforementioned meme tokens in a bear market environment.
Social media and celebrity influence heavily impact Dogecoin’s value, contributing to its speculative nature and occasional sharp declines. Its unlimited supply and lack of scarcity model pose challenges for long-term investment.
Dogecoin’s peak in May 2021, fueled by Elon Musk’s SNL appearance dubbing it a “hustle,” marked a downturn from which it never fully recovered.
Despite occasional signs of resurgence, Dogecoin struggled amid a new meme coin rally in 2024. While Dogecoin saw a 32% increase, competitors like Shiba Inu is up 60%, Pepe is up 692% and dogwifhat is up 1,171%, approximately, surged with market caps exceeding $2 billion, making them formidable alternatives for quick gains.
On the date of publication, Chris MacDonald 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
