Cryptocurrencies are a hot topic, and there are many people who have invested in these digital assets. However, it is important to know when to sell or avoid cryptos, especially in the current bear market.
There are many cryptocurrencies that have been created in the last few years. Some of them have turned out to be duds, while others have turned out to be legitimate projects with potential for growth and profitability.
Some people argue that it is too early for investors to sell their cryptos while others believe that it is time to start selling cryptos so as not to miss out on the upcoming gains.
In the year thus far, major coins are down substantially. And overall, Bitcoin (BTC-USD) is leading the slump, unfortunately. It recently fell below $18,000 but is back up above $20,000. In this environment, it is no surprise that investors are looking for cryptos to sell rather than buy.
With all of this in mind, this article will give you reasons to reduce or sell your positions in certain cryptos.
Of course, the best approach when it comes to this subject would be for each investor to decide on their own whether they want to sell or avoid cryptos depending on their risk appetite and investment goals. Nonetheless, these three cryptos stand out as ones to get rid of.
Cryptos to Sell: Shiba Inu (SHIB-USD)
The year thus far has been unkind to cryptos. The price of various cryptocurrencies is crashing to new 2022 lows as hedge funds and institutional investors try to withdraw their funds and move their capital to safer investments.
In turn, only the most risk-tolerant investors are staying the course right now. But even for them, the list of cryptos to buy is thin. It’s hard to predict the future of cryptocurrencies, making them riskier than traditional investments like stocks, bonds or real estate.
When you add a social media mix, then all bets are off. And that is the unfortunate case with Shiba Inu (SHIB-USD), a meme coin that was introduced to take advantage of Dogecoin‘s (DOGE-USD) buzz. Dogecoin is a decentralized, peer-to-peer digital currency that lets you easily send money online.
Dogecoin was created as a joke by programmer Billy Markus in 2013. However, it became one of the biggest coins in the world, and Shiba Inu wanted to capitalize on the momentum. Luckily, it did, once reaching a position of $0.000086 on October 27, 2021.
However, Dogecoin has increased its use cases. Meanwhile, Shiba Inu remains stuck with low utility. SHIB is an ERC-20 token on the Ethereum (ETH-USD) blockchain, leading to high transaction costs. To incentivize the network, these “gas” fees need to be charged for miners to sustain and make transactions happen.
With all of this in mind, Shiba Inu remains one of the most notable cryptos to sell.
Dogelon Mars (ELON-USD)
Before we understand Dogelon Mars, it is important to understand Dogecoin and its intimate relationship with Elon Musk.
Like the rest of the crypto space, Dogecoin had a great 2021. The chief reason, though, was not functionality. Instead, Elon Musk’s tweets favoring DOGE helped its valuation immensely. He has paired it with concrete steps as well, such as how Tesla (NASDAQ:TSLA) accepts Dogecoin as payment, and SpaceX will follow suit soon.
Dogelon Mars (ELON-USD) is a project that aims to replicate the success of Dogecoin but also incorporates a nod to Elon Musk’s vision for colonizing Mars. Like Shiba Inu, it is an ERC-20 token. Thus, it suffers from expensive gas fees. This can be a huge problem for the users of the network as well as the developers who are building DApps on the platform.
Plus, as my InvestorPlace colleague Omor Ibne Ehsan says, a major problem is that the Methuselah Foundation holds 43.2% of all Dogelon Mars in circulation. If the foundation starts selling the tokens, it could knock off any remaining value. Therefore, it is an extremely risky investment in the crypto space.
Cryptos to Sell: ApeCoin (APE-USD)
ApeCoin (APE-USD) is a meme coin you can use to buy memes on the ApeCoin marketplace. It was created by the makers of the Bored Ape Yacht Club non-fungible token (NFT), which is an Ethereum-based platform for digital trading assets.
Overall, like other cryptos on this list, one of the key drawbacks that ApeCoin shares with most other ERC-20 tokens is the high gas fees. Plus, the NFT craze is petering out due to the wider economic downturn.
In 2021, the total volume of transactions came to $40 billion. However, between mid-February and March of this year, spending volume fell sharply from $3.9 billion to $964 million, according to a study from the monitoring platform Chainalysis.
Collectively, as I’ve touched on, the cryptocurrency market is highly volatile. And like many other cryptos, the price of APE appreciates and depreciates — making it difficult to forecast the token’s future value. There are already thousands of other cryptocurrencies out there that ApeCoin has to compete with. And with uncertainty surrounding a crypto in an uncertain market, this seems like one to avoid.
On the publication date, Faizan Farooque 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.