Down 44% to $1.24 trillion yearto date, the crypto market hasn't ducked the recent weakness affecting most asset classes. But even within the industry, Shiba Inu (SHIB 6.35%) and Dogecoin (DOGE 2.42%) may be at higher risk of underperforming because of their hype-driven investment communities and weak fundamentals. 

1. Dogecoin 

Down 52% this year, Dogecoin is proof that hype doesn't necessarily lead to lasting success in the cryptocurrency market. Despite the enthusiastic promotion by Tesla CEO Elon Musk, the once-popular meme coin isn't recapturing its previous momentum, and it has fallen behind newer and more complex rivals.

Screen flashing "sell" in red.

Image source: Getty Images.

Musk has long wielded considerable influence over the cryptocurrency market, but that power seems to be waning. Recently, Dogecoin enjoyed a 20% rally on Musk's acquisition of social media giant Twitter, where he wants to accept Dogecoin as payment for its subscription service, Twitter Blue. But the hype didn't last, with the asset now down roughly half from the April 25 announcement. 

Dogecoin relies on unsustainable hype because of its poor functionality compared to rivals. The platform doesn't support decentralized applications (autonomous programs that use smart contracts to offer services on the blockchain). On top of this, its volatility makes it an unstable medium of exchange, while an inflationary design (5 billion new DOGE are created every year) makes it a poor long-term store of value.

2. Shiba Inu 

Down by a staggering 66% in 2022, Shiba Inu's crash has outpaced established blockchains like Bitcoin and Ethereum -- down 38% and 48%, respectively, in the same period. The underperformance is likely to continue because Shiba's developers have been unable to shed the token's reputation as a speculative meme asset, despite their attempts to expand its functionality.

Launched in 2020, Shiba Inu carefully played into the same social trends that made its rival, Dogecoin, successful: dog-related branding and Musk-related hype. And it quickly rose to become one of the largest cryptocurrencies, with a market cap of around $37 billion at its peak. But Shiba Inu has been unable to maintain its momentum, despite its developers' ambitious efforts to stay relevant.

In March, the platform announced a metaverse project, which will include over 100,000 plots of virtual real estate, purchasable with Shiba Inu's native token, SHIB. But unlike more established metaverse cryptos like The Sandbox and Decentraland, Shiba Inu's project has yet to attract high-profile investors. This suggests it is still far from shedding its reputation as an unserious cryptocurrency. 

Not all cryptos are created equal

While cryptocurrency assets tend to move up and down in tandem, that doesn't mean they are all the same. Meme coins are performing particularly badly right now and may continue to face the brunt of the dip because of their weak fundamentals and hype-reliant marketing strategies. Investors should avoid Shiba Inu and Dogecoin until their developers convincingly resolve these challenges.