Dead Coins: What Are They & How to Spot Them

While there are almost 23,000 cryptocurrencies created to date, many either are no longer active or hold any significant value. In fact, when these cryptocurrencies are removed from the equation, fewer than 8,900 crypto coins remain active and viable for investing or trading today. Just as more cryptocurrencies are entering the scene regularly, others are achieving the status of dead coins. If you’re one of the millions who invest in a crypto coin, you need to know what dead coins are and how to spot them. 

Key Takeaways:

• Dead crypto coins imply that these coins do not have adequate funding or have been removed from leading exchanges.
• Some of these dead coins include Jesus coins, Squid Game coins, BitConnect coins, and Aeron coins.
• Dead coins are usually memes or joke coins that bear no real utility.

Is Cryptocurrency Dead?

When you first hear the term “dead crypto coins,” you may wonder if cryptocurrencies are coming to an end. While many crypto coins are no longer circulating or valuable enough to trade, thousands of others have extensive utility and are poised for growth. 

Crypto industry is in its infancy despite recent black swan events, and many new platforms still introduce new technologies, usages and more. The truth is that some of these projects, like Arbitrum, have taken off. Others, without a solid foundation, will fall to the wayside as better platforms are introduced or as technology becomes obsolete. With this in mind, cryptocurrencies are constantly evolving rather than dying. 

What Are Dead Coins?

While some dead crypto coins have simply run their course, others may have had inadequate funding or been removed from leading exchanges. Their development teams may eventually have to call it quits. These projects are then ultimately categorized as a type of “dead crypto” or abandoned coins. 

They may have once had a great future outlook but succumbed for various reasons. For example, scam dead coins were specifically designed to manipulate prices for the gain of some at the expense of many. One type of scam dead coin scheme is known as pump and dump. Often, the project's development team holds the majority of the coins and is the only one who gains from the scam. In addition to these dead crypto coins, some projects are memes or joke coins. Take Jesus Coin as an example. It may have caught on fast and become popular, but without practical utility, it’s doomed to fail. 

Symptoms of a Potential Dead Coin

Investors stand to lose a substantial amount of money by investing in dead coins and in coins that will eventually become dead. In 2017, roughly 80% of initial coin offerings were scams, and those who got involved with them lost money. Fortunately, there are a few factors to look for to avoid falling into the same trap again. One of them is the crypto token's distribution. Legitimate projects have equitable coin or token distribution rather than giving the team and developers a large amount of the allocation. Also, look at a coin's trading volume. Those that have low trading volumes may have minimal user interest or poor utility. These are red flags that the project may either be abandoned by its developers or run into funding issues. Remember that a cryptocurrency with less than $1,000 in trading volume over the last 90 days is considered dead, so a trading volume approaching that level should be viewed with skepticism. In addition, many dead cryptocurrencies typically don't possess any utility. They have no gaming mechanism and provide no way to stake their tokens. They may not be associated with a lending platform or used for NFT creation. When a coin lacks utility, it’s a joke or meme coin. Even cryptocurrencies with utility and reasonable trading volume may be at risk of failure without adequate funding. When a new cryptocurrency project launches, it typically does so in stages. While new users may invest in the coin immediately, they often do so, assuming that the platform will continue to develop and more utility will be added. When funding dries up, however, development ends. This can result in a dead coin. 

Examples of Abandoned Dead Coins

There are thousands of dead crypto coins, but some have gained considerable attention and are solid examples: 

• BitConnect (BCC)
• Squid Game (SQUID)
• Aeron (ARNX)
• OxBTC

How to Avoid Projects That Might Become Dead Coins

It’s a challenge to anticipate which coins will become dead, as was the case for early investors in ARNX. However, there are some warning signs to look for upfront before investing. Doing so may help you avoid considerable financial loss. 

For example, you can research a project’s coin distribution. Large distribution to the team or developers should be considered with skepticism, as it may indicate a pump-and-dump scam.

Trading volume is also another good lookout factor. Projects listed on popular exchanges may have higher liquidity and lower risk. Look at the platform's website and social media accounts to ensure the project is active and thriving. Make sure to also carefully research a coin's utility and the project team’s plans for future development.

Should You Still Invest in Crypto?

Before investing in any cryptocurrency, be sure to learn more about the project. Doing so may help you avoid poor investment decisions. However, even bona fide projects can still succumb due to market dynamics, funding loss and other issues. Because of this, there’s always a risk of loss when investing in cryptocurrencies — as well as the potential for stunning gains. 

In addition to conducting careful research, you can limit your exposure to risk by maintaining a diverse portfolio, rather than putting all of your eggs in a few baskets. Carefully monitor the projects you invest in as you would the businesses in which you buy stocks. This may allow you to act quickly if a project’s tide is turning so that you can reduce your exposure to loss. 

Learn more: Bybit Launchpad (A Gateway to Discovering Promising Crypto Projects)

The Bottom Line

As is the case with stock investments, investing in cryptocurrencies brings with it the potential for both risks and rewards. Many cryptocurrencies have reached the status of “dead coins” over the years, but there are steps you can take to reduce your risk of making poor decisions and lock in gains from your crypto investments.

#Bybit #TheCryptoArk