Cryptocurrencies have been on a tear to start the year. Bitcoin’s (BTC-USD) price hit a six-month high near $24,000 following the latest interest rate hike from the Federal Reserve. Bitcoin had been trading below $16,000 last December. Other cryptos, including Ethereum (ETH-USD), are rallying too. In fact, the top 100 cryptocurrencies rose a combined 37% in January. With investors anticipating an end to the Fed’s rate hikes, many are turning bullish and again wading into cryptos. However, skeptics remain when it comes to digital coins and tokens. And some technical analysts say that the current rally of Bitcoin is likely to break down at $25,000 as it meets resistance. At this pivotal point for crypto, here are three sorry cryptos to sell in February before it’s too late.
Still among the most speculative of cryptocurrencies, Dogecoin (DOGE-USD) has been rallying this year along with other digital assets. Since the start of January, the price of DOGE has risen 31% to 9 cents. While this year’s rally is encouraging, it doesn’t make Dogecoin a smart investment. This is, after all, still a meme token that features a cartoon drawing of a Shiba Inu dog and was developed by two software engineers as a joke.
Given its nature, DOGE is usually among the first cryptocurrencies to sell off at the first sign of trouble in the industry, and its declines can be steep. Doigecoin’s price was effectively cut in half in the last two months of 2022, falling from 14 cents on November 1 to 7 cents on December 31.
Such extreme volatility makes Dogecoin a dangerous investment and one investors should avoid. While the price is cheap, there are many other, more legitimate cryptocurrencies that investors can put their hard-earned capital towards.
FTX Token (FTT)
Believe it or not, a digital token tied to bankrupt cryptocurrency exchange FTX is still available to buy. And it has risen substantially this year along with other cryptos. So far in 2023, the FTX Token (FTT-USD) has gained 130%, rising from 84 cents to its current level of $2.04. This after FTX collapsed in spectacular fashion on Nov. 11 last year, with $8 billion of missing assets, more than one million creditors, and multiple charges of fraud levelled at co-founder Sam Bankman-Fried.
The implosion of FTX led to contagion across the global crypto industry, leading other exchanges and lenders to freeze clients’ accounts, halt operations, and, in many cases, file for protection from creditors.
Yet all the drama and heartache doesn’t appear to have deterred investors from bidding up FTT. It’s a strange situation given that the FTX crypto exchange is unlikely to be revived, and Sam Bankman-Fried could spend years if not decades behind bars.
Why bet on FTT with all of its baggage?
Solana (SOL-USD) is a public blockchain platform that is able to facilitate smart contracts. Unlike the other cryptos on this list, SOL has some utility and a purpose. And its price has been skyrocketing this year, gaining 90%. However, Solana still poses meaningful risk.
The biggest risk posed by it is that it is prone to being hacked. The most high-profile hack of the crypto occurred last year when $320 million of Ethereum was stolen from its platform.
Solana uses a “wormhole” to connect its blockchain to the Ethereum blockchain, and that connection lacks rigid security and has proven easy to hack. While the developers behind Solana insist they are working to improve its security protocols, there is still reason to be weary of future hacks.
That’s especially true since the latest data shows that hackers are targeting crypto more than ever. A newly released report from blockchain analytics firm Chainalysis shows that hackers stole a record $3.8 billion of cryptocurrencies in 2022, and the growth of losses from the hacking of cryptos shows no sign of slowing. Proceed with caution.
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.