The crypto market has certainly come a long way this year, with the price of Bitcoin (BTC-USD) up 75% since January. Ethereum (ETH-USD) has also done well, having risen 53% in the same period of time. But while the crypto winter of 2022 seems to be behind us, many digital coins and tokens continue to struggle or, worse, are subject to frequent pump-and-dump schemes that leave investors short-changed. Leading cryptos such as BTC and ETH are performing well, but many smaller digital assets continue to struggle, resulting in a divergence between the biggest cryptos and lesser-known ones, of which there are thousands. With the crypto market remaining heavily fragmented and volatile, we offer up three cryptos to sell in August before they crash and burn.
Shiba Inu (SHIB)
Why? That is the question investors need to ask themselves before putting money into Shiba Inu (SHIB-USD), a cryptocurrency that started as a joke and serves no actual purpose. Worse, Shiba Inu is based on another crypto that also started as a joke — Dogecoin (DOGE-USD). That makes Shiba Inu a joke of a joke. But make no mistake, the joke is on any investor who allocates capital to this digital token. After all, the only thing that seems to move the price of SHIB are tweets Elon Musk posts of his pet dog.
Beyond having no practical purpose or utility, SHIB has also proven to be a bad investment, with the price down more than 40% in the last six months. Among cryptocurrencies, Shiba Inu remains extremely volatile. In the 24 hours before this article was written, SHIB’s price rose 5% and fell 8%. Also important to keep in mind is that Shiba Inu currently trades at just fractions of one cent. How do you value an investment with a decimal point and five zeros in front of it? This is a top cryptocurrency to avoid.
Ripple (XRP)
The price of the cryptocurrency Ripple (XRP-USD) has gone crazy lately, and investors should proceed with caution regarding this digital asset. XRP’s price surged in July following a court ruling that determined the cryptocurrency is not a security such as a stock and should not be regulated like one. Following the court ruling on July 13, Ripple’s price surged over 76%. Whether cryptocurrencies should be classified as securities or not is at the heart of efforts to regulate digital coins and tokens.
Ripple also generated headlines when an analyst at Wells Fargo (NYSE:WFC) issued a forecast saying that XRP could reach as high as $500 per token. Given that XRP is currently trading at 63 cents, the bullish forecast from Wells Fargo generated media headlines and debate on social media. While the catalysts and positive sentiment towards XRP might be encouraging, XRP has been here before. The crypto’s all-time high of $3.38 was reached in January 2018. It is now 81% below that high and has crashed many times over the years.
Solana (SOL)
Down 44% in the last 12 months as the broader crypto market rallies, it might be time to throw the towel in on Solana (SOL-USD). That is a bit of a shame as Solana has a lot of promise, and many crypto enthusiasts remain bullish on its long-term prospects. A leading cryptocurrency when it comes to decentralized finance (DeFi) transactions, Solana has much in common with Ethereum. However, SOL is able to process DeFi transactions faster than Ethereum, leading many people to claim it is superior to ETH.
Currently, Solana can process 65,000 transactions per second compared to the 30 transactions per second that Ethereum can process. The lightning speed of Solana gives it an edge over ETH, as well as traditional banks and credit card companies, say advocates. The problem is that since Ethereum upgraded to a more energy-efficient proof-of-stake operating protocol, investors seem to prefer ETH and have moved money into it rather than Solana, leading to the price decline. In time, SOL might recover. But for now, it is a crypto to sell in August.
On the date of publication, Joel Baglole did not hold (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.
