Overvaluation occurs when the price of a cryptocurrency exceeds its intrinsic value. This situation often arises from speculative trading, hype, or market sentiment rather than fundamental analysis.Investors may be driven by fear of missing out (FOMO) or unrealistic expectations about a coin’s future potential. Such emotions can lead to excessive buying pressure, pushing the price higher and distorting its true worth. When a cryptocurrency is overvalued, it may not reflect its real utility, adoption rate, or technological advancements. This disconnect can create an unsustainable market environment, where prices eventually correct themselves. Overvaluation poses risks for investors, as they may face significant losses if the market adjusts. To avoid such pitfalls, it’s essential to conduct thorough research and analyze the underlying factors that contribute to a cryptocurrency’s value. Understanding these dynamics can help in making more informed investment decisions.