Events throughout 2022 have warned crypto investors of how quickly the market could reverse. A new ‘risk list’ compiled by Investorplace analysts analyzes altcoin projects that continue the impact of destruction and appear to lack a long-term future.
Healing the wounds of Terra and FTX crashes
As the crypto world continues to evolve, investors need to be mindful of which projects they want to support in the long term. Last year, the treacherous “crypto winter” saw the industry’s market cap drop from $2.2 trillion to $800 billion at year-end. While we may see some kind of resurgence in 2023, all is not rosy in the industry. In the midst of this complex landscape, it is quite important to identify cryptos to avoid and stay away from potential risks.
Despite a renewed interest in crypto, many projects remain flawed or predatory, leaving investors in a dangerous position. Regulatory pressures that followed the FTX scandal only heightened concerns as governments around the world wanted to set new precedents that could reshape the industry. In light of these developments, investors need to choose wisely. With that in mind, let’s take a look at 7 cryptos to stay away from, according to Investorplace analysts.
Investorplace: 7 most dangerous altcoins to avoid at all costs
Shiba Inu (SHIB)
The popular meme coin has taken its investors on a fast-paced journey over the past few years. However, like most of the cryptos discussed in the article, it lacks a competitive advantage, making it a lackluster long-term option. Shiba Inu’s team is currently seeking greater acceptance with the layer-2 scaling solution in Shibarium. Shibarium aims to reduce costs and increase transaction speeds for its users with use cases across gaming, metaverse, and NFT.
Despite these advances, its price is driven almost entirely by various cycles of hype driven by tweets from popular personalities. While these can lead to short-term gains, they are highly speculative and unpredictable.
Terra Classic (LUNC)
Terra Classic is among the riskiest altcoin projects due to the dramatic collapse of the Terra network. Despite the developers doing their best to save the project, it seems quite difficult to recover their losses anytime soon.
In early 2022, Terra was among the top altcoins to consider in a true bull market. It had a strong tier 1 network, a vibrant ecosystem of decentralized apps, and an extremely popular stablecoin with an innovative pricing model. It even offered investors arbitrage opportunities for passive income.
However, when the stablecoin pricing model collapsed, their prices dropped to just a fraction of a cent. It hasn’t improved since then, and it’s unlikely to make a comeback anytime soon, according to its analysts.
ApeCoin (APE)
ApeCoin is backed primarily by the Bored Ape Yacht Club (BAYC) brand, the team behind the popular NFT complication on Bored Apes. The NFT token gained momentum after hitting a staggering $40 before pulling back rapidly after the $1 exit price. However, it has lost almost all of its value in line with the massive slowdown in NFT volumes last year.
The primary interest in ApeCoin is the ability to stake and receive 90% of the rewards. Moreover, it could become one of the few currencies in the metaverse, a market worth billions in the future. However, there are many concerns about the sustainability of these awards and BAYC’s ability to attract new users with flashy new games and immersive metaverse experiences.
Dogecoin (DOGE)
Dogecoin is a cryptocurrency born mainly out of humor and never intended to have grand development plans. Based on Elon Musk’s tweets and risk market sentiment in 2021, DOGE’s price skyrocketed by over 10,000%. However, like its peers, its value has plummeted, exposing gaps in its foundations.
Perhaps one of the worst things about Dogecoin is its endless supply, which continues to drive prices down regardless of demand. In contrast, Bitcoin has a supply of 21 million and gets its value from there. Conversely, Dogecoin is facing an ever-increasing supply with 5 billion DOGE added per year driving prices down. Moreover, it continues to depreciate and keep its investors on alert all the time, without any major real-world benefits.
Much of Dogecoin’s short-term rally was triggered by Elon Musk’s actions and statements. cryptocoin.com In this article, we have included the Twitter move, in which the DOGE price increased by 30%.
Audius (AUDIO)
Blockchain publishing platform Audius (AUDIO) offers a very interesting use case. Moreover, Louis the Child has impressive collaborations with some of the leading names in music like deadmau5 and popular platforms like TikTok.
Audius claims its decentralized structure provides greater control over content, better balancing, and superior sound quality. However, other platforms like Bandcamp, Sound Cloud, and Tidal are apps that have been in the game much longer and have already addressed the trouble spots. As such, Audius doesn’t offer much to its investors, and analysts say it’s best to watch it for a while.
Zcash (ZEC)
Zcash is a privacy-focused altcoin project with multiple use cases, but its future is threatened as regulatory winds gather. For years, government agencies have sounded alarmed about the growing threat of privacy-focused cryptos like Zcash and the need for additional legal action. But over the past year, it seems the threats are finally coming true.
For example, the European Union made waves last year when it introduced stricter know-your-customer rules for crypto firms, effectively banning privacy coins ZEC. These rules require firms to collect and hold information to identify customers, make transactions traceable and thus limit the appeal of privacy coins like ZEC.
Elsewhere, Dubai has banned trade and other activities related to privacy-focused cryptocurrencies. Hence, this increased pressure makes Zcash and its peers among the best cryptos to avoid.
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