Which cryptos to avoid?
The crypto market remains highly volatile, even amidst the 2023 bull run. While many coins show promise, others should be avoided due to a lack of utility, fading hype, or manipulation risks. As an experienced trader, I analyze the real downsides of these risky cryptos.
Floki Inu (FLOKI) Just Another Failing Meme Coin
Floki Inu is a meme coin inspired by the popularity of Dogecoin and Shiba Inu. However, it has failed to develop any real identity or utility:
- Tried introducing utility through a gaming metaverse called Valhalla, but saw little adoption or progress
- Relies on hype cycles common with meme coins, making it susceptible to pump and dumps
- Like most meme coins, has no underlying value beyond its online community
Terra Classic (LUNC) Dying Following Major Stablecoin Failure
Terra Classic is the troubled token linked to the failed Terra USD stablecoin. In May 2022, the entire system imploded, erasing $60 billion in value:
- Terra USD lost its 1:1 peg to the US dollar, setting off a death spiral
- Trillions of Terra Classic tokens were minted in an attempt to retain the peg
- Project has since moved to new Terra blockchain, leaving the old token with no purpose
This shows the dangers of complex algorithmic stablecoins with flawed designs.
FTX Token (FTT) No Future Following Exchange Collapse
The FTX token has plunged following the high-profile bankruptcy of the FTX crypto exchange last November:
- FTX declared bankruptcy amid liquidity issues and allegations of misuse of customer funds
- Native exchange token now backed by nothing tangible after company failure
- With lengthy court cases ahead, the FTT token likely serves no utility
Avoiding this failed exchange’s token allows traders to focus on fundamentally stronger crypto projects.
Conclusion
Avoiding buying into the hype of failing meme coins, unstable algorithmic stablecoins, and useless exchange tokens allows crypto traders to focus on projects with stronger fundamentals.
When evaluating any crypto investment, be sure to analyze real-world usage and adoption levels to gauge if the coin or token has lasting value. Promising cryptos aim to solve meaningful problems instead of relying solely on speculation.
FAQs
Q: Why are meme coins considered risky investments?
A: Meme coins like Floki Inu rely more on hype cycles and online communities than utility. They often see pump and dumps, making profits unpredictable for investors.
Q: What happened with the Terra USD stablecoin and its connected token?
A: Its stablecoin lost its peg to the US dollar in May 2022. This set off a death spiral where trillions of linked Terra Classic tokens were minted, erasing $60 billion in value overnight.
Q: Could the FTX exchange token (FTT) go to zero?
A: Yes, with FTX declaring bankruptcy and the FTT token no longer having any utility, further price declines to zero are very possible.
Q: What’s the best way to pick “safe” crypto investments?
A: Evaluate real-world usage, merchant adoption rates, long-term development roadmaps. The most promising projects have lasting value by solving real problems instead of relying on speculation.
Q: Beyond the ones discussed, what other crypto assets seem risky right now?
A: Older payment coins like Dogecoin and Shiba Inu lack major differentiation from competitors. New meme coins, metaverse tokens, and untested DeFi protocols can also often be too speculative.
