3 cryptocurrencies to avoid like the plague in April

For more than a century, the stock market has stood on a pedestal above other asset classes. Although the stock market will not outperform bonds, commodities or housing each year, the average annual return on stocks in the long run far exceeds the return on bonds, commodities and housing.

But in the short term everything is drastically different. For the past two years, cryptocurrencies have been circulating in the stock market. While the benchmark S&P 500 just over twice the pandemic low of March 2020, the total value of digital currencies has risen sharply by 15 times!

But just because the market value of a cryptocurrency is rising, it doesn’t mean that all digital currencies are worth the investment. The following trio is a great example of cryptocurrencies that should be avoided like the plague in April.

Inspired by shiba-inu coins have grown over the past year. Image Source: Getty Images.

Siba-Inu

Last year Siba-Inu (SHYB 2.32% ) was the hottest cryptocurrency on the planet, and it brought a truly staggering return of almost 46,000,000% (no typo). But in April, as almost every month since reaching its all-time high of $ 0.00008841 in late October, Shiba-in topped the list of digital currencies to be avoided like the plague.

If there is a positive result, it is that in 2022 more catalysts worked in Siba-Inu than last year. The developers are currently privately testing the Level 2 Shibarium blockchain, which should drastically reduce the transaction fee if it is made public. After launching Shibarium, Shiba Inu developers can focus on gaming ambitions based on irreplaceable tokens (NFT) and deploying their own version of the metaworld.

While this may seem great, there is no shortage of reasons for investors to be very skeptical of SHIB. To begin with, it is not yet clear when Shibarium is scheduled to launch and whether this 2nd layer update will work properly. NFT-based games cannot move forward until transaction costs are reduced.

Even more worrying is the lack of competitive advantage and strong differentiation in Shiba Inu. SHIB is nothing more than an ERC-20 token created on the basis of Etherium blockchain. In other words, it is nothing more than a payment coin – and there is nothing special about a payment coin. It does not enjoy any benefits initially, and its blockchain does not offer an advantage over other blockchain-based payment solutions or traditional solutions.

Interestingly, the shiba-inu is not even a useful payment coin. Data from Cryptwerk’s online business catalog show that only 648 merchants accept SHIB as a form of payment. This is a drop in the bucket compared to more than 500 million global entrepreneurs.

If you need another reason to keep your distance, keep in mind that the life-changing benefits of payment coins and protocol tokens in the crypto arena almost always lead to equally large returns. If in 2021 SHIB gains as much as 121,000,000% year-on-year, the next 12-24 months are likely to see a big rollback.

An astronaut holds a rock on another planet.

Image Source: Getty Images.

Dagelon Mars

Although in 2022 this was largely unnoticed, the recent surge was higher Dagelon Mars (ELON) (pronounced as “Dog-a-lon”) returns it to the radar as a digital currency that should be avoided like the plague.

Generally, investors should be very skeptical about tokens that aim to convert other successful coins. In the case of Dogelon Mars, he seeks to succeed coin memes Dogecoin (DOJ 1.66% ) while using interplanetary vision Tesla CEO Elon Musk. In other words, the whole project seems to focus on loud words on social media and hopes that the hype will push ELON beyond the moon.

Before the front-page mission was removed last year, Dogelon Mars was considered the first interplanetary currency. He also pledged to send ELON to victims of carpet cravings and fraud. “Carpet pulling” is an event where cryptocurrency developers run away with investors’ money. Although this preliminary mission statement sounded noble, the need for an interplanetary currency seems to exist far away.

In fact, the need for ELON as a payment coin in itself looks like a stretch. Despite some excavation in late December and again in late March, I still can’t find a list of vendors willing to accept ELON as a form of payment. With the exception of Dogelon Mars trading on multiple cryptocurrencies, ELON has no usage options.

Not to sound like a broken record, but the story is not a friend of Dogelon Mars. Just as Shiba Inu is facing a serious reversal, so is Dogelon Mars after gaining more than 1,800% in the last six months. Without any material catalysts ELON is likely to repeat its performance from April to June last year, when the token rose sharply and then lost 97% of its value.

A shiba-inu dog looks at something in the distance.

Image Source: Getty Images.

Dogecoin

The third cryptocurrency to be avoided, like the plague in April, is another glass-inspired high-fleet, Dogecoin.

Before Shiba-inu captured the crypto landscape, Dogecoin rose about 27,000% in the six months from early November 2020 to early May 2021. This rally was sparked by speculation about increased payment acceptance and support from Ilona Mask. Dogecoin is one of the three digital currencies owned by Musk, and he did not hesitate to promote memes on the subject of shiba-inu to showcase his love for Dogecoin on Twitter. Tesla has even started accepting payments to Dogecoin for certain goods.

But Dogecoin has a number of fatal flaws. Like shiba-inu, it is nothing more than a payment coin that lacks competitive advantage and differentiation. Although there has been a lot of noise on social media in support of DOGE’s short-term pumps, its blockchain network offers nothing unique that consumers who want to pay for the crypto couldn’t find anywhere else.

In addition, the option of using Dogecoin is almost non-existent. Although Tesla has attracted a branded retailer, only 2,048 retailers worldwide accept DOGE as a form of payment, according to Cryptwerk. Although it is more than three times more traders than SHIB, it took Dogecoin more than eight years to reach that mark.

In addition, over the past three years, the use of the Dogecoin blockchain has hardly increased. According to BitInfoCharts.com, average daily transactions continue to cover between 20,000 and 30,000 per day. Even if the Dogecoin transaction fee has dropped, token usage remains low.

Finally, DOGE faces the same challenge as Siba-Inu and Dagelon Mars when it comes to historical superiority after life-changing achievements. DOGE has already lost about 80% of its all-time high. However, when I studied the performance of multiple payment coins, I found that their returns typically ranged from 93% to 99% after their respective peaks. In other words, Dogecoin still has many downsides.

This article reflects the opinion of a writer who may disagree with the “official” recommendation position of the premium Motley Fool Advisory Service. We are motley! Questioning the thesis of investing – even one of our own – helps all of us think critically about investing and making decisions that will help us become smarter, happier and richer.

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