During This exercise, some cryptocurrency memes that emerged from internet memes, yielded amazing results.
The dogecoin, a token that was created as a joke and inspired by the Shiba Inu dog, has risen more than 3,300 percent since the beginning of the year, according to data from CoinDesk. Cryptocurrency Shiba Inu, which also has this breed of dog as a reference, has soared more than 45,500,000 percent till the date.
These extraordinary results have driven some investors looking for the new digital currency best sellers based on these memes. However, the current market environment may not help as a result of this abundance of cryptocurrencies, Christopher Vecchio, senior currency strategist at Forex analysis site DailyFX, explained to Distributed Ledger in an interview.
The role of the Fed in cryptocurrencies
The harshest speech by the Federal Reserve sparked selling pressure on crypto assets, since the agency announced the reduction of the bond purchase program and analysts estimate up to 3 increases next year.
Thus, the bitcoin is down nearly 30 percent from its all-time high from $ 68,990 in the first week of November, while ether is down more than 18 percent from its all-time high of $ 4,866, according to data from CoinDesk.
Increasing institutional participation in the forex market could reduce the space for meme tokens, some analysts said. “As the market becomes more efficient and more smart money comes in, there is less retail money,” explains Jason Desimone, director of blockchain at crypto-focused software company Ubik Group.
Investing in meme tokens is not always a safe betanalysts said. “A lot of people will play with these coins trying to choose the next Doge or the next Shiba,” Desimone said. “And a lot of people fall by the wayside.”
Before investing in these coins, experts recommend being careful when deciding which tokens to invest in and avoiding falling for scams. What do we mean by hoaxes? Sometimes, developers leave the project halfway, fleeing with investor funds.
An example is Squid Game, a cryptocurrency that attracted attention in part because its name replicated the viral hit of the Korean series “The Squid Game.” The token rose to $ 2,857 from $ 39 in just three hours and then crashed to almost zero. Everything seems to indicate that the developers gave up the tokens after capturing the money.
There were warning signs that were not taken into account as investors reported that they could only buy but not sell SQUID, while there were several misspellings in the crypto white paper.
When examining crypto projects, investors should analyze the track record of development teams and verify if they are legitimate.
It is also essential observe the token distribution model. None of the developers should have more than 5 percent.
The value of the community
One of the aspects in which the investor can fixate and that can anticipate the success of the operation is the existence of a community behind the currency.
In Sometimes the feeling of belonging is so strong that developers They begin to look for a purpose for that digital asset according to the needs of the holders of the currency.
This community allows the cryptocurrency to grow and develop. Celebrity endorsements can also help. This is the case of Elon Musk and his activity on Twitter supporting bitcoin (the company allows you to pay with it) or with his statements about dogecoin.
This is not to say that there is no risks. One of them is to lose everything invested, since it is among its nature to have a value that ranges from zero percent to one million, experts point out.