The crypto market has seen tremendous growth and adoption over the past few years. However, not every crypto asset is built on solid fundamentals or has a promising long-term future. As investors, it’s crucial we discern the potential diamonds from the fool’s gold – the cryptos with strong utility and real-world value from those that are essentially ticking time bombs waiting to implode.
In this article, I’ll highlight three cryptocurrencies that are flashing warning signs, and argue why selling them sooner rather than later is likely your best bet. My goal isn’t to spread FUD or suggest abandoning crypto altogether. Rather, I aim to help fellow investors avoid some potentially disastrous mines hidden within this largely nascent and exciting new asset class.
The cryptos I’ll be covering have critical flaws in their technology, vision, or value proposition that make major long-term issues almost inevitable. While their demise may not happen overnight, the writing is clearly on the wall. By dumping these assets now, you can reallocate your capital into more promising blockchain projects that are almost certain to outperform over the next 5-10 years.
Of course, actively shorting these cryptos does pose risks, given the market’s volatility. As such, I would not advise using significant leverage unless you have the experience and risk tolerance to stomach major swings. A more prudent approach may be to simply remove these doomed cryptos from your portfolio to make room for up-and-coming disruptors in the blockchain.
Dogelon Mars (ELON-USD)
Dogelon Mars (ELON-USD) is a dog-themed meme coin that has no real utility or innovation supporting its growth. Rather, the project’s previous growth has been largely driven by hype and speculation, with its value remaining highly volatile and unpredictable.
Moreover, Dogelon Mars is heavily influenced by the Methuselah Foundation, a non-profit organization that controls 31.4% of the token supply and has the power to manipulate the token’s price action. It previously held near 43% of this token’s supply, but has started to slowly sell its holdings. The Foundation has little to do with the token’s mission, and I believe it has no reason to keep holding Dogelon Mars.
With no real use cases beyond memes and hype, Dogelon Mars seems destined to fade away over time. Its value is entirely dependent on speculation and sudden pumps, making it an extremely high-risk investment. The Methuselah Foundation’s large stake and lack of clear direction for the token are also major red flags. There are simply far better crypto investments to choose from that have real-world utility and staying power.
OKB (OKB-USD)
OKB (OKB-USD) is the utility token of OKX, a leading crypto exchange and Web 3.0 technology company. It has surged above $50 earlier this year due to its token burn program, which uses 30% of the transaction fees from the spot market to repurchase and burn OKB. However, this is an unsustainable strategy that artificially inflates the token’s price and does not reflect its true demand or utility.
While these token burns may temporarily boost OKB’s price, they cannot support real long-term growth on their own. The token lacks compelling utility and use cases beyond speculative trading.
Thus, relying on token burns while lacking meaningful utility and facing competitive and legal threats makes OKB a very risky bet going forward. Investors should be wary of buying into temporary short-term spikes in this token’s value. Instead, I think investor should focus on the token’s weak fundamental value. In my opinion, OKB looks positioned for decline. The time to dump appears to be now, before the damage intensifies.
Filecoin (FIL-USD)
Filecoin (FIL-USD) is a decentralized storage network that aims to create a global, open-source, and verifiable market for data. Currently, this token has a very high inflation rate. Filecoin’s current yearly inflation rate stands at 56%, meaning 161.6M FIL were created in the last year. This rate of inflation is often in the triple digits, which is not sustainable for any crypto project.
This extreme level of inflation puts immense downward pressure on FIL’s price over time. While the token may seem cheap now, that is largely an illusion caused by rapid supply growth. Filecoin also faces issues with scalability and usability as running nodes requires substantial computational resources and storage. The complex tokenomics further confuse matters for investors.
In my view, Filecoin appears fundamentally flawed as an investment. Its technology may hold promise for decentralized storage, but the tokenomics are structured in a way that hurts FIL holders. Plus, inflationary pressures seem likely to persist and kneecap any sustained price appreciation. Investors should strongly consider dumping FIL before inflation and other core deficiencies further erode its value.
On the date of publication, Omor Ibne Ehsan 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.
