The recent crypto rally has sparked excitement, particularly in speculative assets, amid rumors of a new uptrend. And yet, caution is advised. This rally may not sustain for long due to economic concerns and the underperformance of alternative cryptocurrencies.
Consequently, high-risk projects are doubtful to perform strongly in the short term, especially until monetary policy becomes more accommodating. Therefore, investors should carefully assess these cryptocurrencies as potential candidates for divestment.
Shorting cryptocurrencies can be profitable by taking a contrarian stance on overvalued assets. However, doing so is similarly dangerous, given the short-term bursts these assets see from time to time to the upside. Thus, a longer-term investment strategy of focusing on the highest-quality cryptos and selling the rest may be the best strategy.
Let’s delve into three of the top digital assets that are allocated to the “cryptos to sell” category right now.
Rocket Pool USD (RPL-USD)
Rocket Pool (RPL-USD) once soared 580% from $8.8 to nearly $60 between May and April. But it has since lost momentum, currently trading at around $37. This suggests growing awareness of project flaws and risks, making RPL a potential sell.
Rocket Pool faces criticism primarily for its smart contract risk. The protocol relies on intricate smart contracts for staking, rETH token, and RPL governance token management. These contracts might contain flaws, vulnerabilities, or unintended effects that jeopardize protocol security and functionality. A significant bug delay in October 2021 highlights this concern.
Additionally, Rocket Pool’s is lacking in maximum supply and has a high annualized inflation rate of 89.45%, as per Coincodex. This makes for an unattractive long-term investment compared to other crypto projects. Therefore, take the road of caution, and consider alternative liquid staking providers.
4-CHAN (4CHAN-USD)
Even with experiencing recent price surges of 4-CHAN (4CHAN-USD), it’s essential to note a significant drawback. This cryptocurrency, unfortunately, is tied to the controversial 4chan website. That offers limited utility beyond catering to the 4chan community, creating hype.
Hype alone cannot ensure the long-term success of a cryptocurrency project. 4-CHAN crypto presents multiple concerns that render it a risky and unappealing investment. This token is one to be avoided.
First, 4-CHAN is highly inflationary and susceptible to dilution. Also, it lacks supply control mechanisms like burning or staking. And, it comes up weak in governance or community participation, leaving holders with no influence over the project’s future direction.
4-CHAN also faces risks of manipulation and misuse by its contract creator, who can freely modify the smart contract, posing significant security and trust concerns for token holders.
These are enough reason to push most long-term, conservative investor types to other assets. Sadly, the risk isn’t worth the potential reward with this one.
Shiba Inu (SHIB-INU)
Known as the “dogecoin killer,” Shiba Inu (SHIB-USD) relies heavily on meme coin status, catapulting its market cap to over $4 billion.
However, over 77% of SHIB addresses are in the red, and its value has dropped 30% year over year (YOY). Despite initial fame, the Shiba Inu metaverse project failed. Token holder count remains static at around 1.24 million, suggesting waning interest.
Shiba Inu’s value, dropping by 33% in the last year, is expected to keep declining in September. Selling now is a smart choice as its potential appears limited. Reinvesting in a crypto project with actual utility is advisable.
Shiba Inu’s metaverse project and token holder count are losing steam, making it prudent to exit due to volatility and lack of utility in such cryptocurrencies. There’s not much to like with this speculative meme token. Unless you’re a member of the Shiba Inu community and investing with money you don’t mind losing, this is an otherwise “fun” token I’d put in the sell bucket for most serious investors.
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.