Cryptocurrencies have come roaring back this year. The price of Bitcoin (BTC-USD), the largest crypto by market capitalization, is up 82% year to date. Ethereum (ETH-USD), the second biggest crypto, is up 56% since January. Sentiment towards digital coins and tokens has improved sharply as investors’ risk appetite has improved with expectations that the United States Federal Reserve is nearing the end of its interest rate increases. Furthermore, several investment firms are applying for and promoting the merits of spot Bitcoin exchange-traded funds (ETFs), a development that analysts say could be a game changer for the entire crypto market. With so much on the rise, investors aren’t even thinking about which cryptos to sell.
Excitement is building and it is being reflected in the prices of crypto throughout the sector. A rising tide is definitely lifting all boats currently. That said, not all crypto is created equal. There are many flawed, even fraudulent, cryptocurrencies in circulation that investors should avoid. Here are three cryptos to sell before they damage your portfolio.
Dogecoin (DOGE-USD)
It’s probably not advisable to buy a cryptocurrency that was created as a joke and serves absolutely no functional purpose. However, that hasn’t stopped investors from continuing to buy Dogecoin (DOGE-USD). Nothing more than the cartoon image of a dog, Dogecoin is known as the original meme token. It is to crypto what GameStop (NYSE:GME) is to stocks. Despite all of this, DOGE continues to attract investors and periodically spikes to extremely high levels.
Currently, DOGE is trading at 6 cents. That’s about 90% below the all-time high of 74 cents Dogecoin reached in May 2021 at the height of both the meme stock craze and when Tesla (NASDAQ:TSLA) CEO Elon Musk was touting the crypto on social media. It even had an appearance on Saturday Night Live during the hype. While DOGE still gets periodically squeezed higher, most recently last November when it hit 13 cents, the price always ends up collapsing lower. In the end, Dogecoin is an unstable cryptocurrency that’s best avoided, which is why it needs to be one of your cryptos to sell.
Pepe Coin (PEPE-USD)
Outdoing Dogecoin when it comes to volatility, Pepe Coin (PEPE-USD) is the latest meme token to attract investor attention. Featuring the cartoon image of a frog and also serving no real purpose, Pepe Coin has been rising and falling in extreme price movements throughout the last year. During the past 12 months, PEPE has rised nearly 2,650%. However, this crypto currently trades for fractions of one cent. Furthermore, it can rise or fall quickly in sudden price movements. To say that Pepe Coin is volatile is an understatement.
Despite the heavy trading volume and accompanying turmoil, PEPE appears to have caught the imagination of retail investors. The internet is awash with stories of how people got rich buying the meme crypto. There is also speculation about what will be the next Pepe Coin. Where this crypto goes from here is anyone’s guess, but if other meme tokens are a guide, PEPE will eventually crash back down to earth, burning the many retail investors who bet on it.
Bitcoin Gold (BTG-USD)
While Bitcoin is often called “digital gold,” there is a cryptocurrency literally called Bitcoin Gold (BTG-USD). It currently trades for $14, down 13% from the past year, and down 97% since it was created in 2017 through a hard fork in the original Bitcoin. Aimed at becoming a store of value or safe haven asset such as the precious metal gold, Bitcoin Gold has failed to catch on in the way its developers had envisioned. As a result, the price of BTG has trended lower throughout the years, especially since the Covid-19 pandemic struck in 2020.
The main problem is that investors tend to prefer real gold as a safe haven in times of economic strife and market turmoil. Also, the overall volatility in cryptocurrency markets in recent years has led most investors to views digital coins and tokens as a risky asset class, further hurting sentiment towards BTG. Bitcoin Gold has endured several network attacks, leading analysts and investors to question its security and stability. In the end, investors interested in Bitcoin should invest in the real thing. BTG is another unstable cryptocurrency.
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.
