3 Cryptocurrencies to Avoid Like The Plague in November | Motley Fool

If you think the stock market has performed poorly over the following year, take a closer look at the cryptocurrency space. Since peaking at a total valuation of around $3 trillion during the second week of November 2021, the total value of more than 21,600 digital currencies has fallen below $1 trillion, according to CoinMarketCap.com.

While a lot can be blamed for the destruction of this value Bitcoin And the Ethereumwhich together account for nearly 57% of the total market capitalization of all cryptocurrencies, it can be argued that the real blame lies with many other crypto projects that have failed to meet expectations.

Although cryptocurrencies are still relatively new and constantly evolving, some projects and cryptocurrencies are clearly bad news. Here are three popular cryptocurrencies to avoid like the plague in November.

Image source: Getty Images.

Dogecoin

The first high-profile cryptocurrency to keep your distance in November is the Shiba Inu-inspired meme token Dogecoin (dog -5.82%). DOGE tokens are up over 100% since it became clear Tesla (TSLA -3.64%) CEO Elon Musk will close his $44 billion acquisition of Twitter.

The reason DOGE holders were so excited to close this deal is that Musk has been a longtime fan of Dogecoin, tweeting memes suggesting that the token could “go to the moon.” Musk appeared earlier Saturday Night Live As “Dogefather,” he tweeted that he would work with developers to improve Dogecoin, one of the three cryptocurrencies the Tesla boss said he has in his wallet. Tesla even accepts DOGE as payment for selected goods.

But despite these strange triggers, there’s nothing concrete in Dogecoin’s sails that can remotely justify its $18 billion market cap.

The biggest problem with Dogecoin is that it is ultimately just a payment currency. There is nothing particularly special about the underlying blockchain technology that would allow it to stand out in a veritable sea of ​​digital currencies that can be used as a form of payment.

To build on this point, it’s not a payment token either. Over the past 10 months, Dogecoin has added less than 100 new merchants to its online Cryptwerk business directory. In fact, it took more than eight years before DOGE was accepted as a form of payment by 2,000 mostly anonymous merchants listed on Cryptwerk.

As I’ve indicated for years, payout currencies that achieve historical gains in a short time frame almost always explode pretty much thereafter. Although the DOGE has regained as much as 93% from its May 2021 high, history shows that most currency payment bubbles end with sharper declines. Since Dogecoin does not offer any competitive advantages, it seems history is poised to win again.

Axi Infinity

The second digital currency to avoid like the plague in November is a gaming-focused token Axi Infinity (AXS -6.44%).

All I can do is make the difference every year, how wrong I was! At this time last year, Axie was the hottest thing in blockchain-based gaming. Users will collect, breed and battle monsters known as Axies, earning different experience points along the way. During a six-month period that ended in mid-January, Axie Infinity generated more than $1.2 billion in decentralized application protocol (dApp) revenue, according to data from TokenTerminal.com.

Another thing that helped Axie Infinity stand out at the time was allowing users to own Axies via non-fungible tokens (NFTs). For decades, computer and console game developers have held the rights to all in-game creations. Blockchain-based games offered to change all that by giving users ownership of their creations, as well as the ability to monetize them.

But like I said, what a difference it makes every year. Over the subsequent 180 days, up to November 2, 2022, Axie Infinity generated just $1.6 million in dApp revenue, according to TokenTerminal.com. The story is somewhat similar to Be[In]Crypto Research, which estimates that Axie Infinity revenue fell from $126.5 million in January 2022 to just $3.2 million by June 2022.

To add fuel to the fire, interest in NFTs as a tradable tool/store of value has virtually fallen off a cliff. According to data from Bloomberg, NFT’s monthly turnover fell from $17.2 billion in January 2022 to $466.9 million in September 2022. That’s a 97% drop for those of you who are keeping the score at home, and a huge hit to gaming-focused businesses. About the idea of ​​NFT personal ownership and NFT market transactions.

Although blockchain-based games may be popular in the future, Axie Infinity is completely avoidable for now.

Two Shiba Inu dogs staring at something.

Image source: Getty Images.

Shiba Inu

The third popular cryptocurrency to avoid like the plague in November is the meme coin Shiba Inu (gray -4.06%).

Shiba Inu’s claim to fame is that it delivered what may be the largest single-year gain for an investable asset in history. Based on an initial value of $0.000000000073 per SHIB coin at midnight on January 1, 2021, SHIB holders found themselves with a gain of over 121,000,000% by October 27, 2021. Shiba Inu eventually ended 2021 up 46,000,000% after withdrawing backwards. If anything, it was the digital currency that showed just how powerful FOMO investing is in the crypto space.

But just like Dogecoin, Shiba Inu lacks the competitive advantages and differentiation necessary to stand out from over 21,600 (and more) cryptocurrency projects. In essence, Shiba Inu is an ERC-20 token built on the Ethereum blockchain. Although Ethereum has been a popular choice among dApp developers, this popularity has translated into relatively slow processing times and costly transaction fees. In addition, as mentioned earlier, there is nothing special about push coins.

SHIB is not a popular payment currency either. Despite the hype it has made on Twitter and message boards, the number of Shiba Inu merchants hasn’t budged much this year on Cryptwerk (659, as of November 2022). This is likely due to the depreciation of the SHIB coins by as much as 91% over the past year, and the unwillingness of traders to accept such extreme volatility.

Although the developers of Shiba Inu are intent on creating blockchain-based games, the popularity of NFTs and blockchain-based games seems like a ship that has sailed. SHIB’s hype for big gains in 2021 can’t provide the same level of momentum anymore.

With history as the enemy of meme coins, I’m expecting an even steeper decline for a project that has yet to prove to be worth $6.7 billion – or even a fraction of that.

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