Cryptos are getting pummeled. The digital coins and tokens have been sliding lower since early November and the selloff has only increased since the start of the new year. The entire sector appears to be caught in a risk-off as investors, fearing higher interest rates and new variants of Covid-19, seek safe haven investment vehicles.
As a result, the entire sector has been declining. And while crypto bulls advocate buying the dip, bears are saying that the current slide is the start of the bubble bursting when it comes to assets that are supported by blockchain technologies.
Whether the current slump is the start of bigger problems, there are some cryptos that look set to crash and burn and investors may want to sell out the following names before there’s nothing left to be recovered.
Cryptos to Sell: Bitcoin (BTC-USD)
As of this writing, the price of Bitcoin is on the verge of falling below $40,000 for the first time since last July when it dropped to $31,576.20. After recovering and hitting an all-time high above $68,000 in early November, the biggest and most valuable cryptocurrency has fallen nearly 40% over the past two months to now trade at just under $42,000.
And while Bitcoin has always been a volatile asset and prone to big swings higher and lower, there are many people in the cryptosphere who feel that BTC-USD’s days are numbered. Skeptics point to the fact that other cryptos, such as Ethereum (CCC:ETH-USD), have more utility and functionality than Bitcoin and will soon surpass it in terms of value.
The main knock on Bitcoin is that its blockchain technology cannot be used for either decentralized finance (DeFi) or to support non-fungible tokens (NFTs). And it is DeFi and NFTs where the cryptocurrency sector is increasingly gravitating.
Increasingly, Bitcoin is being rendered obsolete by cryptos that have greater functionality, such as ETH-USD, and newer digital tokens that are springing up all the time. Some analysts have even compared Bitcoin to other now outdated technologies such as videocassette recorders (VCRs) and rotary dial phones to explain the way in which BTC-USD is headed. If the rout in Bitcoin continues, investors wanting exposure to cryptocurrencies may want to look elsewhere.
Now for one of the less flashier cryptos, Litecoin does not get the same amount of attention as Bitcoin and Ethereum, but it remains a significant digital asset nonetheless.
But at its current level of $125.52, LTC-USD has come down 65% since peaking at $384.53 last May. While there have been a few bounces higher, Litecoin’s decline has continued unabated for nearly eight months now. And more pain could be ahead for investors if Litecoin continues to get pulled down with the broader cryptocurrency market.
Founded in 2011 by a former Google engineer Charlie Lee, Litecoin is widely viewed as the first “altcoin,” a cryptocurrency that is based on Bitcoin’s original open source code but has an altered blockchain and provides faster processing speeds.
While Litecoin was initially viewed as a legitimate contender to Bitcoin, its popularity has shrunk in recent years as crypto miners and developers focus on newer technologies. Today, Litecoin is viewed as a bit of a dinosaur in the crypto universe and its blockchain technology is seen as getting long in the tooth. This helps to explain why LTC-USD’s decline has been persistent over the past year, and only getting worse.
Cryptos to Sell: Shiba Inu (SHIB-USD)
What’s left to say about Shiba Inu, a cryptocurrency that was started as a joke and serves absolutely no purpose whatsoever? Based on a meme of the Shiba Inu breed of Japanese hunting dogs, SHIB-USD has only been propped up over the past year by Tesla (NASDAQ:TSLA) Chief Executive Officer Elon Musk, who periodically tweets about the coin, sending its price rocketing higher for brief periods.
Last October, Shiba Inu’s price jumped 70% in 24-hours after Musk issued a cryptic tweet about his own Shiba Inu puppy. Beyond those tweets, nothing significant has happened to move the price of the fledgling digital token.
Given that it serves no actual purpose, it should come as no surprise that SHIB-USD is currently worth less than a single penny. The cryptocurrency trades at $0.000026, down 63% from a peak reached in late October of last year.
The decline over the past few months has been swift and sharp. And given the number of other cryptocurrencies available to investors, as well as cryptocurrency-based funds, it makes no real sense for investors to hold onto this asset.
While some investors on social media promote the idea that Shiba Inu will eventually morph into a more functional digital token, to date there is no evidence that it will ever be more than the meme crypto it was designed to be.
Perhaps the only cryptocurrency that is more of a joke than Shiba Inu is the one on which the meme coin was based — Dogecoin. Often referred to as the original meme cryptocurrency, Dogecoin was invented in 2013 by IBM (NYSE:IBM) software engineer Billy Markus and Adobe (NASDAQ:ADBE) software engineer Jackson Palmer as a complete joke.
Dogecoin remained largely dormant until retail investors that frequent the WallStreetBets Reddit page decided to pump it higher. And, as is the case with Shiba Inu, Dogecoin’s most high profile advocate has been Elon Musk, who has referred to himself as the “Dogefather” and led a campaign to try and push the price of DOGE-USD as high as $1.
The $1 campaign ultimately failed, and Dogecoin has been on a steady decline since last spring. After cresting at $0.69, the price of DOGE-USD has fallen 67% to now trade at $0.14. However, even the current price of Dogecoin seems ridiculously high when one considers the digital coin is nothing more than a cartoon image of a dog.
Shiba Inu is based on the original Dogecoin meme, which, again, was started simply as a joke. There is nothing more to Dogecoin than that, and its rise last spring defied logic. In the end even Mr. Musk admitted that his championing of the nascent cryptocurrency was simply a “hustle.” Investors would be smart to remember that and dump Dogecoin.
On the date of publication, Joel Baglole 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.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.