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Solana (SOL) is going through delicate times facing network issues, congestion bugs, transaction failures, and rug pulls within its DeFi ecosystem. In this context, Finbold has selected three Solana tokens to avoid this month, while facing uncertainty.
It is notable how the Solana ecosystem has gained the spotlight in 2024 amid growth and increased market interest. The network’s native token, SOL, climbed market cap ranks and now positions itself among the five most valuable cryptocurrencies.
Previously, we published a list of the three best Solana tokens to invest in, highlighting solid projects of the ecosystem.
However, investors turned excessively greedy while meme coins and rug pulls started dominating the cryptocurrency market. Following this unsustainable shift, cryptocurrency traders started recording substantial losses with tokens that erased gains in a matter of hours.
Avoid dogwifhat (WIF) and BONK, Solana’s leading meme tokens
Dogwifhat (WIF) led the market in price performance, volume, and overall interest during the recent meme coin mania. Moreover, the Solana ecosystem was a clear winner in traders’ preference for speculating with these tokens, increasing WIF’s outreach.
Now, as the market pivoted and traders started looking for ways to keep their acquired profits, meme coins like dogwifhat should be avoided.
Interestingly, WIF has two key supports below its current price of $3.28 per token. First, at around $2.0, which also plays a psychological level, and later at $0.30. This makes for a huge liquidity gap of 85% potential losses from the closest support ($2) to the lowest one ($0.30).
A similar analysis might apply to Bonk (BONK) and other meme tokens from the Solana ecosystem, which traders should avoid.
These tokens already present higher risks than the usual ones natural to cryptocurrencies. Meanwhile, the inherent risks of liquidity issues, death spirals, early investors’ sell-offs, and the greater fool theory increase as the ecosystem’s base layer goes through the malfunctioning Solana is currently experiencing.
Jupiter (JUP)
Another token to consider avoiding during Solana’s network issues, congestions, and transaction failures is Jupiter (JUP).
Essentially, Jupiter is a decentralized exchange for trading perpetual contracts, which is a variety of Futures popular with cryptocurrencies. This is a promising project and Finbold featured JUP as one of the three best Solana tokens to invest in 2024.
Nevertheless, perpetual contracts are a delicate financial product that highly relies on solid networks. Facing issues could liquidate positions that otherwise would not suffer, traders may not be able to make needed adjustments, and the protocol could see a lower demand in this unfortunate context.
Additionally, JUP is a token that was recently airdropped, meaning that there is still relevant short-term selling pressure.
All things considered, this current selection of three Solana ecosystem tokens to avoid in April aims to assist traders in identifying risks and making better decisions. Still, each trader should do their research and make decisions according to their perception.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.