The global cryptocurrency market has long been driven by the fortunes of bitcoin, and with good reason. Its dominance is such that when the price of bitcoin goes down, other cryptocurrencies suffer the fallout.
But bitcoin isn’t the only crypto out there. Some may may good investments, while others may be best avoided. Here are four crypto investments you might want to steer clear of right now, according to financial experts, followed by a couple that pose less risk.
Vince Stanzione, founder and CEO at First Information and author of “The Millionaire Dropout,” called dogecoin the “meme that refuses to die.”
“It started as a joke,” he told GOBankingRates. “It has charm, a celebrity supporter in Elon Musk, and a dedicated community, but no real fundamentals. I am still surprised it has a $24 billion market cap. If it were a company, that would put it in the S&P 500.”
Meme coins often benefit from “short-term pumps” triggered by something as simple as a billionaire’s tweet, Stanzione said. “But the crashes are severe. DOGE is a gambling token, not an investment. Avoid it.”
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Chickencoin qualifies as an “ultra illiquid micro-cap token” that can create legal and financial problems in addition to financial risk, according to Chad Cummings, an attorney and certified public accountant (CPA) at Cummings & Cummings Law who previously worked in finance and tax.
“I see investors stuck with six-figure paper losses that they cannot substantiate for tax purposes because no credible market data exists and issuers disappear,” he told GOBankingRates.
Here’s another meme coin with “no utility, whale-driven price spikes, and no accountability,” Stanzione said.
“[PEPE] launched in 2023 on pure internet hype,” he explained. “It has no roadmap, no team, and no practical use — just viral momentum. It peaked near $12 billion around this time last year and has since been cut in half. Expect another halving by 2026.”
Like dogecoin, shiba inu is a meme coin that exists “primarily” as a joke, Cummings said, adding that he would “never” invest money in them.
“‘[They] rise on social media attention — not cash flow,” Cummings said. “When sentiment breaks, liquidity evaporates, spreads widen and retail holders get trapped while insiders exit into thin markets.”
Stanzione said he is “very negative” on the crypto sector for the next 12 to 24 months and expects a “big clear out,” so he doesn’t recommend any right now. If prices fall to a more rational level over the next couple of years, he could “become more bullish.”
Cummings is similarly cautious when it comes to putting investment money into cryptocurrency. But if he were to recommend a crypto, he would pick the world’s two biggest.
“Bitcoin and ethereum present the only rational starting point for most investors,” he said. “I advise my clients to treat bitcoin as a highly speculative alternative asset with a transparent monetary policy and deep liquidity, and I view ethereum as critical infrastructure for many real projects.”
This article originally appeared on GOBankingRates.com: I’m a Financial Expert: 4 Crypto Investments I’d Never Recommend — and 2 I Would
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