finbold.com
The cryptocurrency market is experiencing a bullish trend, marked by Bitcoin (BTC) reaching new all-time highs in a matter of days. The enthusiasm surrounding Bitcoin’s achievements has spilled over to the general market, with several cryptocurrencies catching up and recording significant gains.
Given this scenario, investors are likely searching for digital assets to trade with the potential for profitable returns. However, despite most assets trading in the green zone, not all offer an equal chance of yielding profits for traders.
In light of this, Finbold has identified three cryptocurrencies that should be avoided in the coming weeks. These warnings are based on the underlying fundamentals affecting the cryptocurrencies.
Chainlink (LINK)
Chainlink’s (LINK) price movement has deviated from the broader market trend that has seen Bitcoin lead the crypto sector to new highs. This departure from the norm is underscored by a noteworthy decrease in dormant circulation supply and an all-time low in weighted sentiment.
Exploring the reasons behind Chainlink‘s subdued performance, a crucial factor is the significant drop in the 180-day Dormant Circulation Supply between February 6 and March 3. According to crypto analysis platform Santiment data, this supply increased from 257,000 to 714,000, suggesting substantial accumulation or a holding pattern among investors.
However, on March 6, a drastic reduction occurred, plummeting from 570,000 to 70,200, signifying an 87.68% decrease. This sudden shift in previously inactive LINK implies a substantial change in investor sentiment or strategic market movements, potentially increasing selling pressure.
Adding to the concerns, Chainlink’s Weighted Sentiment has reached a new low at -1.265, representing a significant bearish sentiment not witnessed since July 2023. This metric evaluates the overall mood in the market discourse, considering the balance between positive and negative discussions across social media platforms. When coupled with a decrease in Dormant Circulation Supply, such a negative sentiment suggests a bearish to the neutral outlook for LINK.
By press time, Chainlink was trading at $20.08, recording weekly losses of almost 6%.
VeChain (VET)
VeChain (VET) has established itself as one of the top-performing cryptocurrencies long-term, exhibiting a spike of over 70% in the last 30 days. This notable surge has generated significant profits for early investors who entered the altcoin earlier this year.
Despite its overall positive trajectory, the current trading status at the $0.04 level indicates short-term bearish sentiments, with weekly losses of around 4%.
At the current valuation, crypto analyst VeFam on X (formerly Twitter) noted that the token is consolidating below the $0.05 level. This consolidation introduces an element of indecisiveness, potentially prompting the asset to initiate a new trend.
Traders should be cautious during this phase, as consolidation can lead to false breakouts, where prices briefly breach but struggle to sustain momentum. The conclusion of consolidation may bring heightened volatility, urging prudent traders to assess breakout strength before considering new positions.
In summary, VET is currently considered an asset to avoid due to the ongoing consolidation. Navigating this unpredictable landscape demands patience for a breakout or confirmed trend before making strategic moves.
Injective (INJ)
In the past week, Injective (INJ) encountered volatility and missed out on capitalizing on the broader market upswing. Despite this short-term turbulence, the Layer 1 blockchain has grown significantly over the past month, posting gains of nearly 30%. However, in the last week, INJ experienced a 3% downturn.
Intriguingly, apart from not leveraging the overall market rally, the token continues to register losses despite introducing inEVM—a rollup aimed at facilitating cross-chain composability. This innovation is acclaimed for achieving genuine compatibility across Ethereum (ETH) and Solana (SOL).
Consequently, traders need to adopt a cautious stance on INJ, observing how the token will evolve in response to these new developments before deciding on any strategic moves. By press time, INJ was comfortably above the $40 support level, currently valued at $42.
It’s worth noting that the crypto market remains unpredictable, and the highlighted digital assets may exhibit a different price trajectory contrary to the highlighted fundamentals.