If you had invested $10,000 in $ADA back in September 2018, your portfolio would still be worth just $10,000 today. Surprised? The reality is that 90% of altcoins are engineered to be dumped, never to recover. In this article, weโll identify the common pitfalls and how to avoid holding these underperforming tokens in your portfolio.
The Changing Crypto Landscape
Gone are the days when a bull run lifted all altcoins indiscriminately. Oversaturation has diluted the market, making it critical to differentiate between promising projects and those destined to crash. With smart research, you can avoid being trapped in worthless tokens.
The Three Deadly Categories of Altcoins
Here are the three main types of altcoins you should avoid at all costs:
Too Old and Stagnant Projects
Artificially Controlled Tokens
Outdated Trend Narrative
Letโs explore each in detail and why theyโre harmful to your portfolio.
1. Too Old and Stagnant Projects
Some cryptocurrency projects have outlived their relevance. They may have been groundbreaking in their early days, but time has exposed their lack of adaptability. Hereโs what makes these projects toxic:
Inconsistent Development: The team releases updates sporadically, signaling a lack of commitment.
Lack of Growth Potential: While widely recognized, these projects no longer innovate or offer upside.
Example :
๐นMonero ($XMR): Once valued for its privacy features, $XMR is now outdated, overpriced, and stagnant since 2022.
2. Artificially Controlled Tokens
These tokens are at the mercy of centralized entities, often the team or venture capitalists, making them highly risky.
Price Manipulation: The supply is fully controlled, leading to erratic and unpredictable price movements.
Abrupt Crashes: These tokens can lose 99% of their value in an instant due to heavy sell-offs by insiders.
A classic example is:
๐ธWorldcoin ($WLD): The team has full control over its supply, making price manipulation inevitable and collapse likely.
3. Outdated Trend Narratives
Tokens tied to past trends often fail to sustain their value. These projects were once hyped but have since faded into irrelevance.
Dead P2E Projects: Gaming tokens like $AXS (Axie Infinity) have seen their ecosystems collapse.
High FDV Tokens: Small market caps with inflated fully diluted valuations (FDVs) face constant sell pressure.
Examples :
๐นAxie Infinity ($AXS): A relic of the Play-to-Earn boom, with liquidity drying up as the trend fizzled out.
๐ธEthereum Classic ($ETC): Lacking updates, $ETC remains overshadowed by Ethereum ($ETH), making it a poor investment.
How to Protect Your Portfolio
Avoiding these types of tokens is crucial for preserving your capital. Here are a few steps to protect your investments:
1. Research Development Activity: Choose projects with active development and consistent updates.
2. Beware of Centralized Tokens: Look for decentralized tokenomics with fair supply distribution.
3. Analyze Market Trends: Focus on emerging narratives rather than clinging to outdated ones.
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