Bitcoin (BTC) has reached a new multi-year high at $45,922 on January 2, 2024. Following its leadership, some cryptocurrencies have been trading at higher prices.
While most people wait for strong price action to deploy capital into a given cryptocurrency, smart money avoids trading overextended speculative assets as part of a good risk management strategy.
Notably, investors can find cryptocurrencies to avoid trading this week using fundamental and technical analysis. In particular, meme coins with poor fundamentals and ‘overbought’ coins according to the Relative Strength Index (RSI).
Avoid trading memecoins in 2024
Memecoins like Dogecoin (DOGE) were initially created as a tool for having fun with digital money. After Elon Musk’s support of DOGE and the surge of Shiba Inu (SHIB), memecoins have become popular among cryptocurrency traders.
Interestingly, Pepe (PEPE) and Bonk (BONK) are examples of meme coins that benefited from speculator’s greed in 2023. BONK was the year’s biggest gainer, but its investors could face a similar fate to PEPE’s and most of these micro financial bubbles.
Savvy investors should avoid trading meme coins this cycle, specifically PEPE and BONK.
Overbought cryptocurrencies to avoid trading this week
On another perspective, Finbold also spotted four non-meme coin cryptocurrencies with high RSIs using CoinGlass’s heatmap. In particular, Filecoin (FIL), Internet Computer Protocol (ICP), BitcoinSV (BSV), and Perpetual Protocol (PERP).
The ‘overbought’ status of these projects increases the odds of price retracement and massive liquidations. However, even an overbought asset can continue to rise in such an uncertain market as is crypto’s.
Filecoin (FIL)
First, FIL scores are 72.28, 78.58, and 86.33 in the 4-hour, 24-hour, and 1-week RSI. They all mark an overbought status to Filecoin, trading at $7.77 by press time, up 5.55% in 24 hours.
Crypto Market 24-hour RSI Heatmap: FIL. Source: CoinGlass
Internet Computer Protocol (ICP)
In the meantime, ICP has a higher weekly RSI of 91.66 while showing a similar overbought 78.3 in the daily chart. The Internet Computer Protocol’s native token started its short-term correction, down 1.47% at $13.50, with 64.49 4-hour RSI.
Avoid trading BitcoinSV (BSV)
BitcoinSV also joins this week’s cryptocurrencies to avoid trading with 76.03 24-hour RSI, trading at $98.33. The most centralized Bitcoin network remains overbought despite losing a massive 7.22% in the last 24 hours.
Crypto Market 24-hour RSI Heatmap: ICP. Source: CoinGlass
Perpetual Protocol (PERP)
Finally, PERP is changing hands by $1.50 at the time of publication, surging $22.52 on January 2, 2024. Meanwhile, Perpetual’s token is overbought on all time frames, registering 84.35 in the weekly RSI and 77.4 in the 4-hour and the daily charts.
All things considered, knowing which cryptocurrencies to avoid trading is crucial in investing. Traders should always monitor relevant indicators and understand their trading projects to increase an already unfavorable odds from a highly speculative market.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
Source: https://finbold.com/6-cryptocurrencies-to-avoid-trading-this-week/