The Spot Ethereum ETFs haven’t exactly gotten off to the perfect start, with these funds experiencing mixed flows in their first three days of trading. Crypto research firm 10x Research has provided some answers as to why institutional investors aren’t so enthusiastic about these funds. 

Wall Street Doesn’t Fully Understand What ETH Is About

10x Research suggested in a recent report that institutional investors haven’t warmly received the Spot Ethereum ETFs because they don’t fully understand what it is about. The report, written by Markus Thielen, noted that these Wall Street investors “usually don’t place bets on things they don’t understand.” 

Interestingly, Bloomberg analyst Eric Balchunas pointed out this issue immediately after the Spot Ethereum ETFs were approved in May. Back then, he noted that one of the challenges these fund issuers would face was distilling ETH’s use case in an “easy-to-understand” way, just as Bitcoin is easily referred to as “digital gold.”

10x Research again highlighted this issue, alluding to the fact that the Spot Ethereum ETF issuers have so far had a hard time explaining ETH to these traditional investors. The research firm specifically referred to BlackRock’s description of ETH as “a bet on blockchain technology,” but these investors still don’t look hooked. 

Additionally, 10x Research noted that the Spot Ethereum ETF issuers haven’t really made an effort to create awareness of their respective funds, with these funds lacking major marketing campaigns. This lack of an easy-to-understand narrative for Ethereum and the efforts from Spot Ethereum ETF issuers form part of the reasons the research firm remains bearish on ETH.

Thielen remarked, “Ethereum might be the weakest link, where fundamentals (new users, revenues, etc) have been stagnant or lower.” The research firm also alluded to ETH’s diminishing use case in this market cycle as another reason to be bearish on ETH. 10x Research argues that Solana, especially with its superior meme coin ecosystem, has stolen ETH’s shine in this cycle, which is why SOL has been outperforming ETH. 

Meanwhile, from a technical perspective, 10x Research highlighted the stochastics indicator, suggesting that ETH is currently overbought. They warned that the crypto token will likely experience significant declines in the short term and stated that “it might make sense to press the ETH short a bit longer.”

Outflows Plague The Spot Ethereum ETFs

According to data from Soso value, the Spot Ethereum ETFs witnessed a net outflow of $152.3 million on July 25 (day 3 of trading), with Grayscale’s Ethereum Trust (ETHE) solely responsible for this development with an individual net outflow of $346.22 million. The other Spot Ethereum ETFs recorded net inflows, but the amount that flowed into these funds wasn’t enough to plug the bleed. 

Since they began trading on July 23, these Spot Ethereum ETFs have witnessed a cumulative total net outflow of $178.68 million, with $1.16 billion already flowing out from Grayscale’s ETHE in the first three days of trading. These Spot Ethereum ETFs enjoyed a great outing on the first day of trading, with a net inflow of $106.78 million on July 23. 

However, they eventually succumbed to the outflows from Grayscale’s ETHE, witnessing a cumulative net outflow of $133.16 million on day 2 of trading and a net outflow of $152.3 on July 25. The outflows from ETHE are already putting significant selling pressure on ETH, potentially leading to price declines for the crypto token in the short term until the other Spot Ethereum ETFs begin to witness an increased demand that can shore up the Grayscale outflows.

Featured image created with Dall.E, chart from Tradingview.com

For well over a century, the stock market has stood on a pedestal above other asset classes. Even though the stock market won’t outperform bonds, commodities, or housing every year, the average annual return of stocks over the long run handily outpaces that of bonds, commodities, and housing.

But things are drastically different in the short run. Over the past two years, cryptocurrencies have run circles around the stock market. Whereas the benchmark S&P 500 slightly more than doubled from its March 2020 pandemic low, the aggregate value of digital currencies has skyrocketed by a factor of 15!

But just because the cryptocurrency market value is soaring, it doesn’t mean all digital currencies are investment-worthy. The following trio is a perfect example of cryptocurrencies that should be avoided like the plague in April.

Shiba Inu

Last year, Shiba Inu ( SHIB -1.04% ) was the hottest cryptocurrency on the planet and it delivered a truly jaw-dropping return of close to 46,000,000% (not a typo). But in April, as in virtually every month since hitting its all-time high of $0.00008841 in late October, Shiba Inu tops the list of digital currencies to avoid like the plague.

If there’s a positive, it’s that Shiba Inu has more catalysts at work in 2022 than it did last year. Developers are privately testing layer-2 blockchain Shibarium at the moment, which should drastically lower transaction fees when it’s launched publicly. Once Shibarium is launched, Shiba Inu’s developers can focus on its non-fungible token (NFT)-based gaming ambitions and rolling out its own version of a metaverse.

While this might sound great, there is no shortage of reasons for investors to be highly skeptical of SHIB. To begin with, it’s not yet clear when Shibarium is going to launch or if this layer-2 upgrade will work as intended. NFT-based gaming can’t move forward until transaction costs come way down.

Even more worrisome is Shiba Inu’s lack of competitive advantages and lasting differentiation. SHIB is nothing more than an ERC-20 token built on the Ethereum blockchain. Put another way, it’s nothing more than a payment coin — and there’s nothing particularly special about a payment coin. It’s not riding any first-mover advantages, and its blockchain doesn’t offer an edge over other blockchain-based or traditional payment solutions.

Interestingly, Shiba Inu isn’t even a useful payment coin. Data from online business directory Cryptwerk shows that only 648 merchants accept SHIB as a form of payment.  That’s a drop in the bucket compared to more than 500 million global entrepreneurs.

If you need one more reason to keep your distance, consider that life-altering gains from payment coins and protocol tokens in the crypto arena almost always lead to equally large reversions. With SHIB gaining as much as 121,000,000% on an intra-year basis in 2021, a massive pullback likely awaits over the next 12 to 24 months.

Dogelon Mars

Although it’s mostly been off the radar in 2022, a recent spike higher in Dogelon Mars ( ELON ) (that’s pronounced “Dog-a-lon”) puts it squarely back on the radar as a digital currency that should be avoided like the plague.

As a general rule, investors should be highly skeptical of tokens that aim to ride the coattails of other successful coins. In Dogelon Mars’ case, it’s aiming to ride the success of meme coin Dogecoin ( DOGE -0.83% ) while capitalizing on the interplanetary vision of Tesla CEO Elon Musk. In other words, the entire project appears to be focused on social media buzz words and the hope that hype will propel ELON beyond the moon.

Before its front-page mission statement was taken down last year, Dogelon Mars was viewed as the first interplanetary currency. It also pledged to send ELON to victims of rug pulls and scams. A “rug pull” is an event where developers of a cryptocurrency abscond with investors’ money. While this previous mission statement sounded noble, the need for an interplanetary currency seems to be a long way off.

In fact, the need for ELON as a payment coin looks to be a stretch in itself. Despite some digging in late December and again in late March, I still can’t find a list of merchants willing to accept ELON as a form of payment. With the exception of trading Dogelon Mars on a handful of crypto exchanges, ELON has no use case.

Not to sound like a broken record, but history isn’t Dogelon Mars’ friend. Just as Shiba Inu is facing a hefty reversion, so is Dogelon Mars after gaining more than 1,800% in the past six months. Without any tangible catalysts, ELON is likely to repeat its performance from April through June of last year that saw the token skyrocket, then subsequently lose 97% of its value.

Dogecoin

The third cryptocurrency to avoid like the plague in April is yet another Shiba Inu-inspired highflier, Dogecoin.

Before Shiba Inu captivated the crypto landscape, Dogecoin galloped higher by roughly 27,000% in a six-month stretch between early November 2020 and early May 2021. This rally was fueled by speculation of increased payment adoption and the support of Elon Musk. Dogecoin happens to be one of three digital currencies Musk owns, and he’s not been shy about promoting Shiba Inu-themed memes to demonstrate his love for Dogecoin on Twitter. Tesla has even begun accepting payment in Dogecoin for select merchandise. 

But Dogecoin has a number of fatal flaws. Like Shiba Inu, it’s nothing more than a payment coin that lacks a competitive edge and differentiation. While there’s been plenty of social media buzz to support short-term pumps in DOGE, its blockchain network doesn’t offer anything unique that consumers looking to pay with crypto couldn’t find elsewhere.

Additionally, Dogecoin’s use case is almost nonexistent. Though it landed a brand-name merchant with Tesla, only 2,048 merchants worldwide accept DOGE as a form of payment, per Cryptwerk.  While that’s over three times as many merchants as SHIB, it’s taken over eight years for Dogecoin to reach this mark.

To add, Dogecoin’s blockchain has seen virtually no uptick in usage over the past three years. Average daily transactions continue to cover hover between 20,000 and 30,000 per day, according to BitInfoCharts.com.  Even as Dogecoin’s transaction fees have dropped, usage of the token has remained low.

Lastly, DOGE runs into the same issue as Shiba Inu and Dogelon Mars when it comes to historic precedence following life-altering gains. DOGE has already lost about 80% from its all-time high. However, when I examined the performance of multiple payment coins, I found their reversions typically ranged from 93% to 99% following their respective peaks. In other words, Dogecoin still has plenty of downside left.

For well over a century, the stock market has been the premier wealth-building machine. Even though it doesn’t outpace bonds or commodities every year, its average annual gain over the very long run is unmatched when compared to other asset classes.

But over the past couple of years, it’s cryptocurrencies that have run circles around the stock market. Since the March 2020 pandemic low, the benchmark S&P 500 has come close to doubling. Meanwhile, the aggregate value of all digital currencies has soared 1,250% to $1.9 trillion.

However, not all digital currencies will end up as winners. The following three cryptocurrencies are perfect examples of tokens that should be actively avoided like the plague in March, and possibly well beyond.

Shiba Inu

The first cryptocurrency to avoid in March (and beyond) is one of the most popular digital currencies of the past year: Shiba Inu ( SHIB -0.84% ). This meme coin galloped higher by more than 46,000,000% in 2021.

The buzz behind Shiba Inu has to do with increased visibility, growing support and hype on popular social media platforms, and the expected launch of a number of upgrades and/or new Shiba Inu ecosystem features over the coming months and years. Concerning the latter catalyst, Shiba Inu’s developers aim to launch a layer-2 blockchain upgrade, known as Shibarium, relatively soon. Shibarium is designed to significantly lower transaction fees, which’ll pave the way for Shiba Inu to launch non-fungible token (NFT)-based gaming in 2023.

Despite these positives, there remain three core reasons to avoid Shiba Inu following its historic run-up in 2021. For starters, history tells us that life-altering short-term gains in the crypto space rarely last. When I examined the performance of payment coins and protocol tokens following monster short-term gains, I found that virtually all of them gave back 93% to 99%+ of their value in the 12 months to 26 months following their peak. With Shiba Inu gaining as much as 121,000,000% on an intra-year basis in 2021, I’d have to think a massive reversion awaits.

Second, even though Shiba Inu has successfully rallied support from holders on social media, confirmation bias isn’t a lasting competitive advantage. The reality is that SHIB is nothing more than an ERC-20 payment coin built on the Ethereum blockchain. It lacks the functionality and differentiation that’ll be necessary to stand out in an increasingly crowded space.

And third, Shiba Inu isn’t a particularly compelling payment coin option. Online business directory Cryptwerk lists 641 mostly obscure online merchants as accepting SHIB for payment as of the beginning of March.  Comparatively, there are well over 500 million entrepreneurs worldwide. With virtually no real-world use, SHIB is an easy pass for investors.

Monero

The second cryptocurrency to avoid like the plague in March is a token I highlighted years ago as being intriguing: Monero ( XMR 1.36% ).

Monero is what’s known as a privacy coin. Typically, cryptocurrencies use unchanged signatures when verifying transactions, which makes it, in theory, possible to track down the sender and receiver of a payment. Monero, on the other hand, uses ring signatures and stealth addresses, which effectively obfuscates the sender and receiver of payments. Monero’s developers believe that all individuals sending and receiving payments using XMR (Monero’s protocol token) deserve the same privacy protections without the risk of others finding out about their spending habits. 

Although the idea behind privacy coins remains intriguing many years later, it does have its drawbacks — especially now.

For example, the Russia-Ukraine war has led many organizations and nations to impose economic sanctions on Russia. One of the potential ways around these financial sanctions is to use cryptocurrencies — specifically privacy coins. This will almost certainly cause regulators to take an even closer look at payment obfuscation in the crypto space.

However, investors should understand that privacy coins were being monitored with a discerning eye long before this latest conflict. Privacy coins have been tied to illicit activity on the dark web for years, and as such have been banned from trading on a number of popular cryptocurrency exchanges. That’s made increasing visibility and usage difficult for the likes of Monero.

Although average daily transactions on Monero’s blockchain have grown from around 4,000 to 20,000 over the past three years, this amount of activity still pales in comparison to the likes of Bitcoin or Ethereum. Considering what’s going on globally at the moment, Monero is a token to shy away from.

Dogecoin

The third cryptocurrency to avoid like the plague in March is the other extremely popular meme coin, Dogecoin ( DOGE -2.16% ). Last year, Dogecoin was the most-searched digital currency in the U.S.

Like Shiba Inu, Dogecoin’s ascent was propelled by increased visibility and a growing community that wasn’t shy about pumping DOGE on social media platforms and message boards. Dogecoin has also received a boost from Tesla Motors‘ CEO Elon Musk, who owns a small position in DOGE. Musk has previously tweeted that he’d be working with Dogecoin’s developers to improve the efficiency of its blockchain network.

While betting on Elon Musk has historically been a smart move, Dogecoin offers a number of reasons for investors to keep their distance. Among them is the fact that Dogecoin lacks competitive advantages and differentiation. DOGE is nothing more than a payment coin, and not a particularly good one at that. Even with upgrades designed to lower its transaction fees to make DOGE more competitive, the number of transactions completed daily on its blockchain has stagnated since mid-2014 at around 20,000.

To build on this point, Cryptwerk notes that only 2,040 global merchants accept DOGE as a form of payment. While that’s three times as many merchants as SHIB, it’s taken Dogecoin more than eight years to reach this mark. When it comes to real-world utility, Dogecoin won’t get holders very far.

Dogecoin is also likely to suffer the same fate as other high-flying payment coins. As I described with SHIB, payment coins that deliver life-altering gains usually give back most of those gains after hitting their respective peaks. Dogecoin topped out at $0.73 in May 2021 and has given back as much as 85% since then. Without any differentiation, a push below $0.10 should be expected.

If you think the stock market has been on fire since the coronavirus crash bottomed out in March 2020, you should take a closer look at cryptocurrencies. The 14,883 digital currencies listed by CoinMarketCap.com have skyrocketed in aggregate value over the past 20 months from $141 billion to $2.58 trillion.

While there are a small handful of cryptocurrencies and blockchain projects that look intriguing from a real-world perspective, the reality is that most of the crypto space is filled with hyped projects that won’t lead to meaningful adoption. As we push into December, the following three popular cryptocurrencies fit this description and should be avoided like the plague.

Shiba Inu

As if there was any doubt, arguably the single biggest cryptocurrency to avoid in December — and the foreseeable future — is dog-based meme coin Shiba Inu ( SHIB -2.94% ).

Shiba Inu has had a year for the ages. Between midnight on Jan. 1 and hitting its all-time intraday high on Oct. 27, SHIB tokens rallied more than 121,000,000%. Gains of this magnitude are unheard of in under 10 months and could have made crypto investors millionaires from mere pocket change.

The rally in Shiba Inu has come on the back of numerous catalysts. These include more crypto exchanges than ever listing SHIB for trading, the launch of decentralizing exchange ShibaSwap in July, the recent landing of AMC Entertainment as it first major merchant, coin burn, and the fear of missing out (FOMO). Considering that Shiba Inu is one of the most-searched coins, FOMO has played an especially key role in pushing its market value higher.

Unfortunately, even the most tangible of these catalysts doesn’t change the fact that Shiba Inu is rife with flaws:

• Shiba Inu’s real-world utility is almost nonexistent. Only 369 merchants worldwide accept SHIB as payment.
• According to Coinbase, the median hold time for SHIB is lower than all other highly popular cryptocurrencies, likely signaling that some folks are chasing momentum and don’t actually believe in the long-term project.
• It offers no competitive edge. As an ERC-20 token built on the Ethereum blockchain, Shiba Inu is exposed to potentially high transaction fees and possible processing lag.

But it’s history that provides the biggest reason to avoid Shiba Inu like the plague. When I examined the performance of a handful of high-flying payment coins that gained anywhere from 24,000% to 461,000% in a relatively short time frame, I found all of them lost 93% to 99% of their value in the subsequent 12 to 26 months following their peaks. I can only imagine what sort of epic reversion awaits SHIB after gaining as much as 121,000,000% in 10 months and not offering any competitive advantages or differentiation.

Dogelon Mars

Another digital currency to avoid like the plague in December is the hyped-up Dogelon Mars ( ELON ) (pronounced “Dog-a-lon”).

If you haven’t heard about Dogelon Mars before, don’t feel bad. As recently as the beginning of September, the cryptocurrency seemingly named after Tesla Motors CEO Elon Musk had a $26 million market cap and was trading for about $0.00000005 per ELON. But by Oct. 30, Dogelon Mars had rocketed to a peak of $1.43 billion in market value.

The bulk of this surge can be traced to two new listing announcements on Oct. 29. That’s when OKEx and Crypto.com listed the rapidly rising ELON for trade.

In theory, the more crypto exchanges that list ELON, the better the liquidity of the coin and the faster the community will grow. It’s no secret that fringe coins rely on social-media buzz to drive engagement and bring in new investors.

The problem with Dogelon and so many other coins is their ambitious mission statements tend to be fluff. The “about” section of Dogelon describes it as “the first interplanetary currency,” and a project that “pledges to send tokens over time to victims of rugs and scams.” A “rug” or “rug pull” is an event where a cryptocurrency’s developers abandon their project and abscond with investors’ money.

This might sound intriguing, but there’s zero need for an interplanetary coin anytime soon. Further, there’s nothing to suggest that Dogelon offers true differentiation among the close to 14,900 different crypto projects listed on CoinMarketCap.com. It’s simply another in a long list of digital currencies being pumped on social media.

As a reminder, Dogelon skyrocketed more than 6,250% between April 22 and May 11 earlier this year, and subsequently went on to lose 97% of its value about six weeks after peaking. Big gains based purely on social-media buzz in the crypto space always prove fleeting, which is why Dogelon Mars should be avoided at all cost.

Dogecoin

This month has, once again, gone to the dogs. The third cryptocurrency worth avoiding like the plague is Shiba Inu rival, Dogecoin ( DOGE 3.58% ).

Like SHIB, Dogecoin has had a stellar year… albeit not one that would have made people millionaires with a $1 or $2 investment. Since the year began, Dogecoin has catapulted higher by more than 4,100%. Although increased adoption and social-media buzz have done their part, Dogecoin’s gains have really come on the back of tweets and commentary from Elon Musk.

Musk only owns three digital currencies, and Dogecoin is one of them. He’s also previously tweeted that he’d be working with Dogecoin’s developers to improve the network. Thus, anytime the self-proclaimed “Dogefather” makes reference to DOGE or the Shiba Inu dog breed, it’s taken as a sign of bullishness by the Dogecoin community.

However, the “people’s currency” suffers from the same issues as the other coins to avoid in December: It offers no competitive edge or real-world purpose.

Though Dogecoin’s transaction fees are lower than the “Big Two,” Bitcoin and Ethereum, its fees are also markedly higher than most other popular payment coins. It tends to be slower at validating and setting transactions than a number of large payment-coin peers, as well. If businesses want efficient crypto payment options, Dogecoin is unlikely to be the coin of choice. As evidence, fewer than 2,000 businesses worldwide accept DOGE as payment, according to online business directory Cryptwerk. 

This probably goes without saying, but it’s still worth hitting home that Elon Musk’s tweets almost always have no tangible impact on Dogecoin. With the exception of commenting that he’d work with Dogecoin’s developers to improve the network, nothing Musk has tweeted has had any impact on the effectiveness of its blockchain. In fact, Dogecoin’s transactions per day hit a three-year low in September, which could signal a dying down of the social-media buzz surrounding this coin. 

Without a competitive edge, there’s simply no reason to own DOGE.