Three cryptocurrencies to steer clear of as selloffs dominate
The cryptocurrency market has been put on alert this week as three popular and highly capitalized cryptocurrencies have experienced increased sell-offs. These sell-offs can lead to volatility as market participants speculate on the impact of increased supply pressure on prices, thereby increasing the risks involved.
The entire cryptocurrency landscape has suffered significant crashes, with most projects seeing double-digit losses so far this month. In total, over $304 billion has left the market since its peak of $2.6 trillion on June 5.
In this context, there are three cryptocurrencies that present a higher risk compared to other projects. Despite being among the most valuable tokens in the market, they have experienced significant sell-off activity.
Firstly, the XRP Ledger (XRP) native token, with a market cap of $27.10 billion, is ranked seventh. Ripple, the company behind its development and the largest holder of XRP, has been involved in significant sell-offs every month since its launch. However, June’s sell-off has been the largest reported to date, with 400 million XRP spent from the treasury account. This amounts to $200 million at an average monthly price of around $0.50 per token. While Ripple has already spent the tokens, they will gradually become a supply pressure on crypto exchanges, which may impact the price of XRP.
Secondly, Avalanche (AVAX), with a market cap of $10.30 billion, has seen a nearly 5% decrease in value in the last 24 hours due to a mysterious whale selling AVAX on multiple exchanges such as Binance and Coinbase. This sell-off, amounting to nearly $55 million, has caused panic-selling among traders.
Lastly, Chainlink (LINK) should be avoided for trading this week. The project’s vesting contracts have put 21 million LINK in circulation, leading to a massive sell-off worth nearly $300 million. The team behind Chainlink has sent 18.75 million of the unlocked amount to a Binance deposit address, indicating their intent to sell nearly 88% of the inflated supply immediately. This represents 3.5% of Chainlink’s $8.4 billion market cap and can create strong supply pressure on the exchange.
Traders and investors need to closely monitor the activities of these cryptocurrencies to make informed decisions. Massive sell-offs are common in volatile markets, and many projects still face ongoing supply inflation, worsening the situation. Therefore, investors should carefully study the tokenomics of each cryptocurrency to avoid becoming the exit liquidity for early investors.
Disclaimer: The content of this article should not be taken as investment advice. Investing in cryptocurrencies is speculative, and there is a risk of losing capital.