Sirwin
Sirwin

Lots of bad cryptocurrencies now command exorbitant prices, Bitwise warns. Which ones are they?

By hashlytag | hashlytag | 25 Mar 2024


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The rise of cryptocurrencies, driven by Bitcoin, has also led to a sharp increase in the prices of venture projects. Investors should approach them with caution.

The cryptocurrency market is currently experiencing a meteoric rise, especially thanks to Bitcoin (BTC) , which is reaching unprecedented heights. However, not all virtual assets are a good opportunity .

Matt Hougan, chief investment officer at Bitwise, warns against the allure of projects with skyrocketing prices and stresses that a certain degree of skepticism is important when diversifying a cryptocurrency portfolio.

Rising Bitcoin pulls up altcoins

Crypto is currently experiencing a "wealth effect" as Bitcoin's surge in price and reaching a new all-time high has encouraged investors to spread their gains into other speculative digital assets.

Hougan notes that the increase in confidence stemming from Bitcoin's performance is leading investors to engage in riskier behavior in pursuit of higher returns.

However, this effort is associated with the risk of legitimizing less credible projects , which under other market circumstances would not have had the chance to gain so much trust and capital inflow.

Hougan believes that what is driving altcoin prices up is not the percentage gains of Bitcoin itself, but the growth of its overall market capitalization .

"In previous bull runs, the total wealth generated was lower than now, even though the growth of the Bitcoin price was higher in percentage."

And since November 2022, when Bitcoin hit its low, its market capitalization has increased by $1 trillion .

AI and meme tokens

This trend has especially increased the value of memetokens and AI tokens (cryptocurrencies that are somehow related to artificial intelligence ).

Cryptocurrencies such as Fetch.ai (FET) , Worldcoin (WLD) and Arkham (ARKM) have made hundreds of percent on this wave over the past month .

However, the advent of artificial intelligence as a tool has brought rapid development for both legitimate projects and fraudulent schemes , increasing the complexity of the investment landscape.

As scams become more sophisticated, it becomes increasingly difficult to distinguish real projects from fraudulent ones.

For example , Humanized AI - a project whose goal was to revolutionize the way artificial intelligence understands human input.

Investors were attracted by the innovative concept of the project and its growth potential, Humanized AI managed to accumulate 173 ETH within a month , which at the time was equivalent to approximately 665,000 USD. Then the website, social network profiles and project tokens disappeared and it was all over

NOTE: The project model lured users to HMZ AI cryptocurrency tokens in exchange for participating in data processing tasks, which matched the trend of incentivizing user engagement with cryptocurrency rewards.

Then there's also a whole host of memecoins and AI tokens that aren't exactly meant to be scams, but are overpriced and unsustainable. There will be thousands of these on the market right now, and new ones are being created every day.

It is therefore a good idea not to get carried away and to analyze digital assets before buying them and find enough information.

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