As we kick off 2024, Bitcoin (BTC) has achieved a fresh multi-year peak of $45,922. This has led to a ripple effect, pushing several other cryptocurrencies to trade at elevated prices. However, it’s important to remember that successful investing isn’t just about identifying profitable opportunities, but also about understanding the cryptocurrencies to avoid trading. This week, we’ll be focusing on two categories of such cryptocurrencies: meme coins with weak fundamentals and those that are currently ‘overbought’ according to the Relative Strength Index (RSI).
Why Meme Coins Are Risky Investments in 2024
Meme coins, such as Dogecoin (DOGE), were originally conceived as a lighthearted take on digital currency. However, following the endorsement of DOGE by Elon Musk and the subsequent rise of Shiba Inu (SHIB), these coins have gained popularity among traders. Despite this, it’s worth noting that meme coins like Pepe (PEPE) and Bonk (BONK), which saw significant speculative interest in 2023, can be risky investments. For instance, those who invested in BONK, the top performer of 2023, may face the same fate as PEPE investors and other similar micro financial bubbles. Therefore, it’s advisable to steer clear of trading meme coins in this cycle, particularly PEPE and BONK.
‘Overbought’ Cryptocurrencies to Be Wary of This Week
In addition to meme coins, there are several non-meme cryptocurrencies that are currently considered ‘overbought’, according to the RSI. These include Filecoin (FIL), Internet Computer Protocol (ICP), BitcoinSV (BSV), and Perpetual Protocol (PERP). The ‘overbought’ status of these cryptocurrencies increases the likelihood of a price correction and substantial liquidations. However, it’s worth noting that even an overbought asset can continue to rise in the volatile crypto market.
Firstly, FIL, which is currently trading at $7.77, has RSI scores of 72.28, 78.58, and 86.33 for the 4-hour, 24-hour, and 1-week periods respectively, indicating an overbought status. Secondly, ICP, which is currently trading at $13.50, has a weekly RSI of 91.66 and a daily RSI of 78.3, also indicating an overbought status. Thirdly, BSV, which is currently trading at $98.33, has a 24-hour RSI of 76.03, suggesting an overbought status. Lastly, PERP, which is currently trading at $1.50, is overbought on all time frames, with a weekly RSI of 84.35 and a 4-hour and daily RSI of 77.4.
The Importance of Knowing Which Cryptocurrencies to Avoid
Understanding which cryptocurrencies to avoid trading is as important as knowing which ones to invest in. By keeping an eye on relevant indicators and having a deep understanding of the projects you’re trading, you can tilt the odds in your favor in this highly speculative market. Tools like the cryptoview.io application can be invaluable in helping you monitor these indicators and make informed decisions.
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Please note: The information provided in this article should not be interpreted as investment advice. Investing in cryptocurrencies is highly speculative and comes with its own set of risks.
