The Fear and Greed Index at 74 indicates a market rush and a high probability of multiplying every invested dollar. However, while investors anticipate an influx of new liquidity, this market exuberance has led to the overbought status of many top cryptocurrencies. This scenario sets the stage for a critical evaluation of meme coins, which, despite their recent popularity, pose significant risks.

Meme cryptos have experienced a substantial rally, with micro-cap meme tokens across various blockchain networks taking off. This surge has driven excitement within the crypto space, particularly as large-cap cryptocurrencies remain relatively quiet. However, this trend may not sustain itself. Meme coins often lack the fundamental support that more established cryptocurrencies have, making them highly volatile and speculative.

As Bitcoin (BTC-USD) shows short-term weakness and other big-cap cryptos stabilize, meme coins could face significant corrections. Traders have flocked to these tokens for quick profits, but the reality is that they can plummet just as fast. It’s essential to approach these investments with caution, viewing them more as lottery tickets rather than stable assets.

Let’s take a closer look at three meme coins you should consider selling in June to avoid significant losses.

Dogecoin (DOGE)

Dogecoin (DOGE-USD): Despite its popularity and strong community, Dogecoin often faces significant price swings and lacks the development and use case of more established cryptocurrencies.

Dogecoin experienced a significant price drop of more than 8% this week,  trading at $0.1476 with a market capitalization of over $21 billion, making it the 8th largest cryptocurrency. This decline was partly due to a bearish pattern that DOGE had been moving within since early May, AMBCrypto reported.

Dogecoin’s value is largely driven by social media trends and celebrity endorsements. This speculative nature can lead to sudden and sharp declines, as evidenced by the recent bearish breakout from a rising wedge pattern. For investors looking for stability, this volatility can be a major drawback.

DOGE’s unlimited supply limit may also complicate matters further for long-term investors, as there is a limited scarcity model to encourage capital growth. Its losses in the short term could also scare off those seeking speculative gains.

Shiba Inu (SHIB)

Shiba Inu (SHIB-USD): Similar to Dogecoin, Shiba Inu has a large following but is highly speculative and can be very volatile.

SHIB has seen a 4% price drop, prompting traders to consider if this is a good buy-in moment. Technical indicators show worsening conditions, partly due to Bitcoin’s failure to break new highs amid hawkish Fed rate projections, as reported by Cryptonews. SHIB could retest its support zone around $0.000018, potentially offering a buying opportunity. 

Also a week ago, almost 2 trillion SHIBA tokens were moved in 24 hours. However, according to IntoTheBlock’s indicators, the volume transacted by larger whales is barely reaching the previous week’s average. This was speculated to be due to SHIB’s poor market performance.

Volatility indicators show that DOGE is more volatile than Bitcoin and SHIB is more volatile than both of them, owing to their differences in market cap and investor psychology. SHIB could be one of the first coins that investors may consider selling if the goal is reduce the risk of large losses given Bitcoin’s short-term weaknesses.

PepeCoin (PEPE)

PepeCoin (PEPE-USD): As a newer meme coin, PepeCoin has seen rapid price changes and lacks strong fundamentals.

PEPE coin’s value has dropped appreciably this week, currently trading at 0.000011 cents and a market cap exceeding $5 billion. The decline is attributed to whales accumulating billions of tokens, impacting market stability. Whales have been withdrawing large amounts of PEPE and other tokens from exchanges, as reported by Techopedia.

PEPE coin’s significant price fluctuations and large-scale transactions by whales raise concerns about potential market manipulation. Whales’ ability to influence the market by accumulating or selling large quantities of PEPE can create artificial price movements, leading to increased volatility and uncertainty for smaller investors.

PEPE coin’s team is also anonymous, which complicates matters further. These insiders can shift the levers in their favor, which makes it especially risky. If one is determined to buy meme coins, PEPE might not be the best option for investors available.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.