It’s been a tough year for cryptocurrency investors. Market leader Bitcoin (BTC) is down more than 70% from its all-time high and many other projects have seen even bigger losses. Whether we call it a bear market or a crypto winter, the effect is the same: prices are down and there is no telling when they will start to recover.
Many crypto veterans view these prolonged price dips as part of a natural cycle and a time to weed out less realistic projects. It doesn’t make it any less painful if the projects that get eliminated are the ones you put your hard-earned money into. For example, some people lost their life savings when some crypto lending platforms collapsed.
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Now more than ever, if you are considering buying crypto, look for worthwhile projects, strong leadership, and a clear strategy for making money. They are most likely to perform well over the long term. On the other hand, the following cryptos seem particularly toxic at the moment.
1. Terra (LUNA) and Terra Classic (LUNC)
There are plenty of smart contract cryptos to choose from, so why invest money in those associated with one of the biggest failures in crypto history? From crypto giant Ethereum (ETH) to fast Solana (SOL) or adaptable Avalanche (AVAX), developers are building decentralized finance and other projects on several different ecosystems. Each has their own strengths and weaknesses, but almost all have a better chance of survival than both Terras.
Following the spectacular collapse of Terra, the blockchain split in two to form Terra and Terra Classic. Both are trying to rise from the ashes, but they both face specific challenges. For starters, there’s an arrest warrant in South Korea for Do Kwon, the co-founder of the Terra ecosystem. It’s unclear how connected he is to LUNA 2.0, but the restructuring was his idea. Terra Classic is community-driven, but it sticks to the same model we’ve seen implode before.
2. Shiba Inu (SHIB)
Shiba Inu is a popular coin that rose to fame last year following the success of Dogecoin (DOGE). The problem? Crypto winter is not a good time to own meme coins. There are a few red flags that Shiba Inu’s growing popularity hasn’t cleared. First, not only is the founder pseudonymous, but Ryoshi also left the project earlier this year. If you are going to put money into a crypto, find out who is behind it.
The second problem is the large number of SHIB tokens in circulation. The project started with a quadrillion tokens and immediately donated half to Ethereum founder Vitalik Buterin. Buterin, who dislikes random projects that offer him parts, burned some and donated the rest to charity. But that still leaves a lot of tokens – and the only real way for the remaining tokens to gain value is if the community burns (destroys) many, many more.
Shiba Inu tried to reverse engineer a whole world of goals. His metaverse project is taking shape, he says he has a layer 2 blockchain in the works to improve the performance of the token on Ethereum, there is also talk of a play-to-earn game. But despite all the promises and buzzwords, there still isn’t much real, verifiable progress. Simply put, Shiba Inu is all bark and no bite.
3. Bitgert (BREEZE)
Several crypto articles feature Bitgert as a fast and inexpensive alternative to Ethereum. But the project rings a number of alarm bells. Notably that there is no information about the founders on the website. Indeed, earlier this year, the team tweeted about the team’s identity being revealed only to have the information removed after accusations that the information was false.
Other red flags include:
- Bad English. Various sites say that Bitgert spends 3% of transaction fees on marketing, which in itself is a warning sign. But if so, the least you can expect is for the site language to be error-free.
- A white paper of only six pages. This is a blockchain that promises to be faster than Solana, but there is no information on how it does it.
- Null total value locked to Defi Llama. Defi Llama tracks the amount of money locked on various blockchains, and the only money locked on Bitgert’s platform is staked money. This means that none of the apps built on Bitgert have any money invested in them.
At the end of the line
The mentioned cryptos illustrate a few different forms that cryptotoxicity can take. Dig deeper on any project before investing, especially those not listed on top crypto exchanges. With over 21,000 cryptocurrencies, you’re sure to find a few that aren’t tainted by scandal and have real utility.
I am not saying that these cryptocurrencies will definitely fail. It is crypto after all, and anything can happen. But since the strongest projects have the best chance of surviving and performing well over the long term, it makes sense to avoid those that raise obvious red flags.
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We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. Emma Newbery holds positions in Avalanche, Bitcoin, Ethereum and Solana. The Motley Fool has positions and recommends Avalanche, Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
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