The crypto market is in complete disarray. With the market capitalization of the industry plummeting nearly $2 trillion in the first half of the year, there’s little reason for optimism. Many industry bulls continue with the “buy and hold” mindset even through this volatility. But the question among more risk-averse investors is over which assets are the cryptos to sell immediately.
Indeed, the most recent crypto crash appears to be more than just a crash. With Bitcoin (BTC-USD) prices at their lowest in well over a year, and money flowing rapidly out of the industry, it is looking like the start to a crypto winter.
This isn’t a terrible thing for the asset class. The market could use some paring down. There are thousands of different coins and tokens but only a few dozen with any appealing uses. Until this period is over with, though, it’s probably best to dump those few speculative assets one might’ve added to their portfolio. Consider these cryptos to sell in anticipation of further losses:
Terra 2.0 (LUNA-USD)
Terraform Lab’s new network, Terra 2.0 (LUNA-USD), might be one of the most talked about projects on the market. But, that doesn’t make it a good buy. The project is attracting eyes for all the wrong reasons, and it’s best to stay away from this project.
The collapse of Terra 1.0 — since rebranded to Terra Classic (LUNC-USD) — sent shockwaves across the asset class. At the time, the project represented one of the top 10 largest cryptocurrencies in the world. Its fall was sudden and very costly to investors. Moreover, it opened up a can of worms that will forever put distrust between Terra projects and their investors.
The weeks since the first network’s demise have brought about a bevy of accusations against both Terraform Labs and founder Do Kwon. Accusations, ranging from tax evasion to embezzlement to governance manipulation and ghost wallets now plague the company. The likelihood that Terra 2.0 comes anywhere close to Terra Classic’s height is slim, and these accusations provide plenty reason to not even risk leaving your money there.
Shiba Inu (SHIB-USD)
Shiba Inu’s (SHIB-USD) token is another cryptocurrency worth dropping before it completely falls off the map. The token had its time in the spotlight, but as it is now proving, it doesn’t present a use case or fast enough growth to warrant keeping in one’s portfolio.
One of the premier meme tokens of 2021, SHIB is one of the best example of crypto’s kindness toward speculative investing. Without ever reaching over one cent in price, SHIB has made some savvy investors thousands upon thousands of dollars. However, as one must do occasionally, SHIB holders need to reevaluate the project to see if it’s continuing to fulfill a role in the crypto asset class. Unfortunately, most would venture to argue that it is not.
Massive projects meant to bolster the project’s fundamental value have been teased. Take for example the Shiba Inu metaverse. First announced at the tail-end of 2021, the metaverse is meant to be Shib’s big project of 2022. However, since announcing a land auction in early April, the project has been too slow rolling. Compound this with a slew of other projects, like the layer-2 Shibarium, which developers are also slowly chipping away at. The hype is starting to slow down, and with the crypto winter upon us, SHIB is running out of time to create an ecosystem that can last perennially.
ApeCoin (APE-USD) is an interesting token in that it isn’t “official” to the blockchain ecosystem it represents. Rather, it’s a fan token to the Bored Ape Yacht Club. But while niche tokens have their places in the hierarchy of blockchain, the APE token’s reliance on the success of Bored Apes make it an unappealing long-term option and high on the list of cryptos to sell.
The Bored Ape non-fungible token (NFT) collection is one of the biggest in the world. Indeed, dozens of celebrities and billions of dollars have flooded into Yuga Labs’ flagship project. Yet, Bored Apes are plagued by controversy as well. They’ve caught the ire of many investors, art critics and even some of the most notable tech moguls in the world. Moreover, the project has seen a whopping three security breaches just this year, with the imminent threat of a fourth looming.
There’s also the threat of Bored Apes simply falling out of investor interest. After all, they aren’t particularly interesting; the 10,000-some tokens are all essentially the same image, with some procedurally-generated details creating some small distinguishing characteristics. It’s only a matter of time before the monkey-centric NFT trend falls out popularity at the hand of the next big trend. With all this in mind, it’s probably best to get ahead of APE’s decline.
Solana (SOL-USD) is one of the best cryptos to sell right now because of its performance issues. Solana isn’t a bad project in theory. But, its multiple outages are certainly hampering any widespread adoption. The project is one of the market’s biggest by market cap. But, as we know from Terra, that doesn’t make it a foolproof investment. The layer-1 decentralized application (dApp) network does fulfill a need; it adds to a robust class of other platforms which host applications for end users to enjoy. These networks are the those laying the foundation for the Web 3.0 era.
But, of the networks contributing to the plinth of Web 3.0, Solana is a weak spot. Compared to competitors like Stellar (XLM-USD), Avalanche (AVAX-USD), Tron (TRX-USD) and more, Solana is just not as capable at scaling.
Sure, developers assert that it has a throughput of thousands of transactions per second, and it does often scale this highly. However, the network is rife with outages, and these outages typically last hours upon hours. Users often criticize the unreliability of the network because of this. Moreover, developers have shown a bit of a blasé attitude toward solving these issues. With this major red flag in mind, investors have plenty of reason to make this one of their cryptos to sell.
Monero (XMR-USD) has a very interesting use case — one which appeals greatly to the ideas of financial freedom that crypto espouses. It’s the leading asset in the privacy coin industry, a sector of digital assets focusing on making transactions completely private and untraceable by anybody else. However, being such a controversial subindustry, private coins are only becoming increasingly targeted by governments.
Unsurprisingly, government officials aren’t too keen on a project which allows any of its users to move money in as large an amount as desired with zero traceability. This type of asset is what feeds the criticism against cryptocurrency for its role in crime. Bears argue against crypto by linking the assets to money laundering and other illegal practices. Monero is an obvious target, since it explicitly advertises itself as an anonymous way to move funds.
Now, we are seeing a renaissance of crypto regulation. The EU, for example, is tightening its anti-money laundering laws to essentially ban privacy coin transactions in most of Europe. Meanwhile, lawmakers in the U.S. rail against the industry for the same reason, at a time when Congress is getting ready to create its own infrastructure. These events spell disaster for XMR, vastly limiting the scope of its use.
Internet Computer (ICP-USD)
Internet Computer (ICP-USD), like Solana, is a layer-1 project. But while Solana at least has a streak of ongoing growth going for it, Internet Computer is stuck in a rut after its immediate plummet upon release. Like Terra 2.0, the revamped network just doesn’t have enough going for it to justify holding.
Launched just last year, Internet Computer claimed that it was ushering in the third major wave of blockchain, after Bitcoin and Ethereum (ETH-USD). It talked big talk, promising internet-speed transactions that would make the network infinitely faster than other layer-1 networks. It brought in so much hype, in fact, that ICP saw a $750 price on the day it launched. Unfortunately, this price is still the coin’s all-time high. The project fizzled out right away, with prices crashing all the way to just above $5.
At the beginning of the year, developers promised a revamping of the Internet Computer ecosystem. A series of governance proposals were released to help shape the network to capitalize on Web 3.0 hype and bridge with other networks. But while these proposals have been a well-meaning attempt to re-establish the ICP brand, prices of the coin are still trading at absolute floor-levels over six months later. It might be time to cut one’s losses with the project and put this on your list of cryptos to sell.
Rounding out the pack of cryptos to sell is Zilliqa’s (ZIL-USD) coin. Zilliqa is not an inherently bad project, to be sure. However, it is definitely one worth weighing one’s options with if they are holding ZIL. Might this project last through an extended crypto winter? If that’s what we’re potentially facing as crypto’s market cap continues to plummet, then there is a strong argument for the negative.
Only the strongest will survive a widespread, prolonged corrective period. This leaves room only for the biggest and most practical projects. Zilliqa, while it had a great run to start the year, is likely just not one of these projects. Much of the hype that’s gotten investors into ZIL regards Zilliqa’s new metaverse space, Metapolis. Metapolis is meant to help Zilliqa compete with other metaverse networks like Decentraland (MANA-USD) and the Sandbox (SAND-USD).
The coin grew fast and large as developers inched closer to Metapolis’ full release in late April. Yet, almost immediately, investors saw the ZIL coin sink right back down to its pre-Metapolis announcement prices. It lived and died by the hype cycle, and now, as the whole metaverse crypto industry is falling out of favor, Zilliqa will not stand out as a necessary project.
On Low-Capitalization and Low-Volume Cryptocurrencies: InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
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On the date of publication, Brenden Rearick 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.