A strong risk management framework is essential for anyone who wants to be successful in cryptocurrency trading. This approach protects investments in highly volatile and rapidly evolving crypto market conditions. In this context, investors need to use different risk management strategies. According to crypto expert Vinicius Barbosa, one of these methods is to avoid overbought cryptocurrencies. In this regard, the expert focuses on 3 altcoins that pose high risks for trading.
Expert: These 3 altcoins are in the high risk zone!
In the arsenal of tools for managing risk, the Relative Strength Index (RSI) stands out. Cryptocurrency investors often use RSI to detect when an asset is overbought. This could indicate a pending downtrend. On the other hand, overbought tokens may precede a sudden price increase in a bearish market. Three altcoins spotted CoinGlass’ RSI heat map on January 13. Ethereum Name Service (ENS), Sui Network (SUI) and ConstitutionDAO (PEOPLE) are giving overbought signals. Therefore, it carries extra risks for investors and traders.
A failed experiment: ConstitutionDAO (PEOPLE)
According to CoinMarketCap, ConstitutionDAO is an experiment that collapsed due to its “failed base.” Still, speculators continued to buy and sell the token, PEOPLE, with surprisingly positive short-term results. Moreover, PEOPLE is showing strong momentum with a slightly overbought 24-hour RSI of 70.17. ConstitutionDAO’s token is trading at $0.0399 as of press time. Additionally, the altcoin fell 4% on the day. However, the weekly Relative Strength Index was 85.17. Investors would do well to stay away from PEOPLE trading due to its lack of organic value.
Ethereum Name Service (ENS) is currently overbought
Meanwhile, although Ethereum Name Service has meaningful demand, ENS should be avoided for now. This is based on overbought RSIs of 77 and around 89 points on the daily and weekly charts respectively. At the time of writing, the altcoin was trading at $22.99, down 8.8% in the last 24 hours.
Altcoin SUI is among the high risks for next week
Similarly, Sui Network (SUI) is giving an overbought signal with RSI points of 75.48 and 84.35 on the daily and weekly time frames respectively. Sui Network attracted the attention of Web3 investors with its highly scalable layer-1 solution and asset-focused model similar to Radix (XRD) and MultiverX (EGLD). Unlike others, SUI has been on the rise recently. SUI was trading at $1.27 at the time of writing, up 5.35% in the last 24 hours.
Despite overbought signals, cryptocurrencies may experience price increases, defying expectations of poor future performance. As a result, investors aiming for conservative risk management should avoid trading altcoin tokens that give overbought signals in order to limit losses. It is crucial for investors to conduct thorough research and understand the potential impacts on their trading activities.
The opinions and predictions in the article belong to the expert and are definitely not investment advice. cryptokoin.com We strongly recommend that you do your own research before investing.
To be informed about the latest developments, follow us twitter‘in, Facebookin and InstagramFollow on and Telegram And YouTube Join our channel!