Cryptocurrencies can fall sharply in price. The “down” list includes meme-coins, Defi-project tokens, and even Ethereum.

What should investors do: get rid of assets or wait out the drawdown? We will touch on coins that show signs of overvaluation and will “deflate” in the near future.

What cryptocurrencies can fall sharply in price?

Although there are many alternative instruments on the market now, a number of assets should be considered first. We will tell you why these tokens were “inflated”, and what to do when the value decreases.

Shiba Inu is a meme token that gave hundreds of percent

Nikita Zuborev, chief analyst of the Bestchange platform, is sure that the Sheba cryptocurrency is overvalued. If you conduct a technical analysis of the course, you can see the overestimated numbers of the index relative to the influence of RSI.

In addition, Roman Nekrasov, one of the owners of the ENCRY Foundation, announced the imminent price drop. In his opinion, the main goal of Shiba Inu is to compete with Dogi. But in order to maintain a stable value and show reasonable growth, ambition alone is not enough. It is not clear what other tasks the token should solve.

If we talk about Dogecoin, then the project has shown that it can “survive” by maintaining capitalization during the crypto winter. In contrast, Shiba Inu has been on the market for less than a year in fairly comfortable conditions. Thanks to an aggressive but undeniably successful marketing campaign, the price of the token was able to soar dozens of times. However, in the coming months, the coin is waiting for a collapse of 70-80%, emphasizes Nekrasov.

What cryptocurrencies can fall sharply in price?  Photo: Marta Branco / PexelsWhat cryptocurrencies can fall sharply in price? Photo: Marta Branco / Pexels

Terra is a global payment system with the LUNA token

 

Over the past week, the LUNA cryptocurrency has almost doubled in price. The price went up from $37.82 to $66.37. Trading volumes on the Binance exchange reached $580 million. 

According to analyst Zuborev, the token is also overvalued in terms of technical analysis. According to him, the RSI strength index is in the region of 80%. This is considered a sign of an imminent reversal. 

However, the price reduction will not last long. On the contrary, the project has huge plans for further development. Experts say that a new wave of growth may begin after the first quarter of 2022. Thus, the Terra network coin has prospects. But it is not worth increasing its volumes in the investment portfolio now. The price is too high.

Filecoin is a decentralized data storage system

Although the idea of this project was extremely promising, due to poor quality implementation, it could not justify itself. Analysts remind that at the peak, the cryptocurrency reached $189 per unit.

Currently, it is fixed at the level of $53-55. Experienced investors say the price is still too high. Therefore, in the near future it is worth waiting for a collapse of up to 50%.

Ethereum is the second largest cryptocurrency by capitalization

Fundamental factors indicate that ETH is also overvalued. The current price in the region of $4,300 is too high. Although this is not a value limit for this cryptocurrency, new circumstances are needed to increase the rate. 

Experts say that the project is priced much higher than it actually is. In particular, this is due to the effect of future news. Investors expect a lot from the upgrade of the network and  the transition to the PoS algorithm for transaction processing. But if the plans are frustrated, then the altcoin may go into a serious correction. 

Ethereum is still a promising asset for long-term investment. But in the local period, it can sag significantly.

What to do if these coins are in your portfolio?

As for the Shiba Inu and Filecoin tokens, they definitely need to be disposed of. The first has nothing but a name. When the “whales” want to take profits and exit the token, its price may go close to zero. Large holders are able to exhaust all the liquidity of an asset in a few minutes. 

Filecoin soared in price due to the fact that investors saw the prospect in the project. However, the hopes were not justified. The token has already fallen three times from its peak. In addition, experts say that the fall will continue. It is worth removing the coin from your portfolio, if it is there. This will save up to 50% of the funds. 

Terra (LUNA) is a sought-after token. Now it has been “swinged”, and it can go for a correction, stopping at around $40. In all likelihood, growth is expected in the future. If you are considering long-term investments, then the coin should be left in the portfolio. But if you are interested in short-term speculation, then sell LUNA right now. 

As for Ethereum, the coin remains promising. The price is currently high and a correction should start soon. Experts advise to sell cryptocurrency and take profits. Finally, when the cost reaches $3,000 – $3,500, the digital currency should be purchased in addition to reduce the average purchase price. 

It is worth remembering that this is not an investment recommendation. Risks and losses incurred during the conclusion of transactions remain with you. Cryptocurrency is a highly volatile tool! Don’t invest what you can’t afford to lose. 

How to behave on drawdowns?

Analysts advise buying more ETH and Terra when these cryptocurrencies lose 20-30% of their current value. In the long term, coins are able to show high profitability.

Unlike them, “mem-coins” can only be bought during severe drawdowns. However, it is recommended to use only free funds for this. At best, you will get hundreds of percent of the profit, at worst, you will lose a hundred dollars. It is not worth considering such tokens as long-term reliable investments. 

Will coins recover this year?

Most of the world’s experts are waiting for Ethereum at $10,000 by the end of 2022. Whereas Terra can reach $100 per coin. However, such an outcome is only likely if the creators of the projects implement their ideas in accordance with the plan. 

Even the founders of the coins do not know what to expect from Shiba Inu and Filecoin. In the event that the conditional Elon Musk starts talking about them again, we should expect a huge increase. As you can see, it all depends on the emotional expectations of the audience. If the “hype” subsides, then the tokens can fall in price almost to zero. 

Output

Now that you know which cryptocurrencies can go down dramatically, evaluate your strategy. To avoid investing in risky, “corrective” assets, reduce the share of “mem-coins” and consider promising projects. With long-term investments, most of them should show a positive trend.

So, diversification, careful analysis and use of only free funds – this is the formula for success in the cryptocurrency market