Title: Meme Coins Face Major Correction, Investors Advised to Avoid Trading Top Performers
Meme coins have been the talk of the town in the cryptocurrency market, with impressive gains dominating the scene in 2024. However, a major correction in the past week has threatened further losses, causing a shift in sentiment from ultra-bullish to slightly bearish.
Over $230 billion was wiped out in a single day from March 18 to March 19, leading to concerns about the sustainability of meme coins’ hype. In light of these developments, Finbold has identified two cryptocurrencies that investors should avoid trading next week.
Pepe (PEPE) has seen a remarkable 500% gain in the last 30 days, but it is now losing momentum with a 55 Relative Strength Index (RSI). A bearish divergence is appearing in the daily chart, indicating a potential price drop. With a market cap above $3 billion and no solid use cases besides being a meme, PEPE faces significant downside risk.
Similarly, Dogwifhat (WIF) has experienced nearly 600% growth in 30 days, attracting retail investors to the Solana blockchain. However, investors may start to realize profits, leading to a potential liquidity shock. If WIF loses its current support level, it could see an 86% crash to its month-over-month lows.
The most dangerous aspect of trading meme coins is the lack of fundamental value, making them susceptible to a “death spiral” once the hype fades. Investors often rely on the Greater Fool Theory, buying overvalued assets in the hope of selling them at a higher price to the next buyer. However, when sentiment shifts, panic-selling can lead to rapid price declines with low chances of recovery.
While cryptocurrencies are unpredictable and further support from celebrities or news could fuel a rally, investors are advised to exercise caution when trading PEPE and WIF. The potential for huge retracements exists, and higher prices may not be sustainable in the current market environment.
It is important to note that investing in cryptocurrencies is speculative, and capital is at risk. The content of this article should not be considered investment advice.
