Key Takeaways:
- Here's a list of five altcoins that investors should be vary of in 2023.
- Inflationary tokenomics and crypto winter might result in losses for traders.
NEW DELHI (CoinChapter.com) — A crypto analyst has suggested a list of altcoins that might witness a massive price drop in 2023, advising investors to reduce their exposure to the tokens.
Twitter-based crypto analyst Karl shared a list of altcoins in a Twitter post along with the token’s current inflation rates. “The main idea behind this is to short a basket of these inflationary tokens against ETH or BTC,” Karl stated in the tweet.
I strongly believe this will be a huge winning trade throughout 2023.
Karl asserted
Given the ongoing crypto bear market, inflationary tokens might find it difficult to survive the crypto winter. Increasing token supply would eventually lead to asset prices dropping without a simultaneous rise in demand.
Furthermore, the demand for cryptos has declined after the market reached a high in Nov 2021. The Terra fiasco, followed by the FTX collapse, has robbed the trust of crypto investors. As a result, the number of new entrants to the market has declined.
Here are some altcoins to which investors should reduce their exposure in the coming year.
1. DYDX
DYDX is the in-house utility token of the decentralized cryptocurrency margin trading exchange dYdX. The token has a total supply of 1 billion tokens, of which nearly 7% are currently in circulation.DYDX grants token holders voting rights.
Additionally, investors use the crypto token to pay trading fees and earn staking yields.
The crypto token is down more than 85% YTD in 2022. Moreover, DYDX prices have shed nearly 96% of their value from the token’s all-time high of $29.4. As per the tweet by Karl, DYDX’s current inflation is at 251.52%, which would prime the token for more downside movement.
Investors thinking of buying the token at the bottom might like to keep the inflation rate for the token in mind.
2. GMT
Green Metaverse Token, or GMT, is the native governance token of the move-to-earn platform STEPN. Users can change their NFT sneaker’s names or level up using the GMT token. Moreover, STEPN can distribute premium game content or high-level activities and profits through GMT tokens.
GMT prices have been in a near-perpetual downtrend after reaching their ATH of $4.51 in Apr 2022. On Dec 23, the crypto token reached a low of $0.29, down nearly 94% from its all-time high. However, the token remains 2,782% above its opening price of $0.01.
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The GMT token’s current inflation is 128.5%, with only 10% of the total supply of 6 billion GMT tokens in circulation. As a result, if traders start shorting the token, GMT might face stronger bearish headwinds.
3. IMX
IMX, an Ethereum-based token, is the governance token for Immutable X, a layer-2 scaling solution for NFTs. The platform offers instant trade confirmation and low gas fees for minting and trading NFTs. Users can also stake IMX tokens.
Like most altcoins in 2022, IMX has not had a very good year. The token is down nearly 91% YTD on Dec 23. Moreover, with a 72.58% inflation and a circulating supply of only 37% of its 2 billion tokens, IMX might continue trending downward in 2023.
However, investors offloading their tokens might look into NFTs to keep a foot in the crypto space, which could act as a bullish cue for the IMX token.
4. MC
MC is a governance token of the Merit Circle that allows holders to contribute to decision-making votes on the platform. Merit Circle is a DAO that aims to maximize yields across play-to-earn games and the metaverse.
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The MC DAO manages the capital allocation among managers and players. The platform also offers scholarships and educational opportunities to budding gamers.
MC prices have shed nearly 94% of their value in 2022, with the token being in freefall since its listing on Gemini on Dec 21, 2021. MC is a small-cap altcoin with a total market cap of $98.12 million at press time.
Increased token supply due to its inflation rate of 63% would likely push MC price further downward.
5. APE
ApeCoin (APE) is an ERC-20 governance token of the ApeCoin DAO. The organization makes decisions like ecosystem fund allocations, governance rules, projects, etc. Yuga Labs, the firm behind the NFT series Bored Ape Yacht Club (BAYC), adopted APE as its primary token for use in the projects it undertakes.
APE launched on Binance in Mar this year, reaching an ATH of $40.9 on the same day. Since then, APE price action has been a downhill journey, with the token losing more than 91% of its value and dropping to a low of $3.57 on Dec 23.
The token has a market cap of $1.28 billion and an inflation rate of 60%. APE has a total supply of 1 billion tokens, of which 36% is currently in circulation.
