The bankruptcy of FTX and the rapid decline of the File FTX It has caused many investors to reconsider the value of these cryptocurrencies. In particular, project tokens, exchanges, and memes need to be questioned more than ever. Three that I think should be avoided at all costs right now are ApeCoin (CRYPT: MONO), bnb (CRYPT: BNB)y dogecoin (CRYPT: DOGE).
Questionable Use Cases of ApeCoin
The ApeCoin launch was one of the strangest in 2022. Yuga Labs, which launched Bored Ape Yacht Club and related non-fungible tokens (NFTs), was not technically involved in the token launch, but received 16% of the tokens. at launch and the four founders of Yuga Labs received 8% of the tokens. Launch contributors received another 14%. The remaining 62% of the ApeCoin supply was, or will be, claimable by some NFT owners. These are the tokens that are traded today. The long-term intention is for ApeCoin to be used in the Bored Ape Yacht Club metaverse game, but there is currently no game or release date. What we don’t know is what the token is worth or why it deserves to have a fully diluted market cap of $3.1 billion. Advocates can claim value in a decentralized autonomous organization (DAO) or stake, but they have never been shown to deliver long-term value to investors. One day, Yuga Labs might provide a use case for the token that provides real value, but until it does, investors should be skeptical. The reality is that no one knows if Bored Apes or their game will have any value a year from now, and I think the token will be much less valuable than it is today.
BNB is another exchange token
Binance Coin has a total value of $51.3 billion and has limited uses. According to the token site, you can “use BNB to pay for goods and services, settle transaction fees on Binance Smart Chain, participate in exclusive token sales, and more.” There is also a BNB chain ecosystem, which gives more utility to the token. But ultimately this is a token tied to the Binance exchange business, and we saw how it ended up with FTX. Binance has no publicly available financial information and operates outside of US securities laws, so investors should be skeptical. The reality of the BNB token is that it relies on a single company, Binance, to generate value. This is a single point of failure that hasn’t worked out well for FTX, Celsius, and Voyager tokens, whose value has collapsed in large part because their creators went bankrupt. I am not calling for Binance to go bankrupt, but taking a chance on a company-linked token is unwise after how we have seen the value of similar tokens collapse.
Dogecoin meme status could end
The Dogecoin community relies on the fact that this was a hoax token to begin with. But investing your money is not a joke. It’s true that Dogecoin has been accepted as payment in some forums, but companies don’t take it as seriously as a stablecoin or even Ethereum or Polygon would. I think the current problem is that meme coins will be taken even less seriously in the future. Real companies will move on and use the blockchain, but they want to be taken seriously with tokens like Ethereum or stablecoins, not some dog meme. The Dogecoin boom was a byproduct of the cryptocurrency bull market. That bull market has come to an end and I think meme coins like Dogecoin will go along with it.
Stay with the best of the best
The future of cryptocurrencies is uncertain, but I think investors would be wise to stick with the highest quality and most widely used tokens available. Ethereum and Solana have two of the largest development communities and would be better choices. Right now, being cautious is a smart approach, and one should stay away from tokens that have little to no use cases today.
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