2 Crashing Cryptocurrencies to Keep away from in 2022 – Motley Idiot

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This has been a golden year for cryptocurrency investors, with the combined market increasing 185% year-to-date to $ 2.2 trillion. Meme coins like Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE) led the bull run. But both look like risky bets for 2022. Let’s examine why their disastrous fundamentals and weak competitive channels could cause investors to fail in the New Year.

1. Dogecoin

In 2021, Dogecoin was up over 3,000% and was among the top performers of the year. And that’s despite a dramatic fall from its all-time high of $ 0.74 that was hit in March (now it’s worth $ 0.16 a coin). And unfortunately for investors, Dogecoin’s collapse is likely to continue into 2022 due to its weak fundamentals and concentrated ownership.

Investors looking at a red stock chart plummeting through the bottom.

Image source: Getty Images.

Unlike rivals including ether and Solana, Dogecoin does not allow decentralized applications (dApps), which are autonomous programs that execute intelligent contracts themselves to offer services on a blockchain. This drastically reduces its possible uses. And what makes matters worse, the built-in inflation means it works poorly as a store of value too.

There are currently nearly 133 billion units of Dogecoin in circulation, and the number is set to increase by 5 billion annually – forever – which will put the price under long-term pressure.

But Dogecoin’s problems don’t end there. According to coinmarketcap.com, 10 holders control 43% percent of all coins in circulation, which gives them a massive impact on the price of the asset. As dire as Dogecoin’s current collapse is, the situation could get worse if the whales swim away.

2. Shiba Inu

Like Dogecoin, Shiba Inu is another hype-fueled cryptocurrency that took a bull run in 2021 before crashing in the second half of the year. From its all-time high of. $ down a staggering 62%0.00008616 Reached late October, Shiba Inu is vulnerable to prolonged downward moves due to its low utility and speculative investor community.

The rally began when Elon Musk tweeted about his recently adopted Shiba Inu puppy breed in October. But despite the hype, the token isn’t very useful. Its extreme volatility makes it a poor store of value and a risky medium of exchange, so most Shiba Inu investors tend to have a short-term perspective (which increases the volatility of the coin).

According to data from coinbase.com, the typical hold time for Shiba Inu is 40 days (compared to 70 and 75 days for Bitcoin and Ethereum). The asset also suffers from concentrated ownership as 10 accounts control a whopping 64% of the supply, giving the whales an opportunity to bring the price down by selling their shares.

Hype doesn’t last

Dogecoin and Shiba Inu are meme coins with bad fundamentals, so their investors rely on the “bigger fool” theory to make money. This concept suggests that you can benefit from an inferior asset because someone else (the bigger fool) is willing to buy it for more in the future.

But at some point the hype evaporates. And the sellers begin to outnumber the buyers, which leads to a crash. New investors should avoid Dogecoin and Shiba Inu in 2022 so they don’t keep their pockets.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all reflect critically about investing and make decisions that will help us get smarter, happier, and richer.


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