The cryptocurrency market has been bludgeoned over the past few months, and it seems no token has been spared. Bitcoin (BTC -1.49%) and Ethereum (ETH -1.81%) are falling although these are the biggest cryptocurrencies, and old hot cryptos like Solana (FLOOR -2.99%) and gimbal (ADA -3.17%) have lost more than 70% of their value in the past six months.
What is difficult right now is whether it is time to buy and hold for recovery or to abandon the crypto revolution. After all, if even a stablecoin like TerraUSD (UST -0.83%) can lose 90% of its value in a week, so what hope do more volatile cryptocurrencies have? I think the answer is in a long-term mindset.
Very real problems exist in cryptocurrencies
This industry is still quite young, very unstable and extremely difficult to assess. We have seen over the past week that algorithmic stablecoins can be staking, which can lead to huge losses, damaging trust in the whole system. Meanwhile, Bitcoin’s fall has undermined the idea that it is an inflation hedge or a safe haven. Ethereum’s network upgrades have been delayed again. Solana’s network periodically crashes and is slower than expected when running.
Are these reasons to panic or just acceptable growing pains? In general, I think it’s time to reevaluate the thesis you had when you first bought cryptocurrencies and whether that idea holds up in reality.
Buy quality, not quantity
Some cryptocurrencies have created real and digital utilities incredibly quickly. For example, according to Solscan – where you can see blockchain transactions and analytics on Solana – there were 49 daily active programs running a year ago and there are now 951.
On Ethereum, the most valuable NFTs have been developed and billions of dollars worth of digital assets are traded every month.
In a downturn, I think it’s essential to buy quality assets, not just what has fallen the most. In cryptocurrency, that means assets that create real and lasting benefits for a digital world. Ethereum and Solana are the clear leaders right now.
What to avoid
I think we will eventually see the decline of meme coins that bring little to no value to the crypto ecosystem. Dogecoin (DOGE -1.33%) and shiba inus (SHIB -1.93%) are prime examples of such crypto projects lacking significant value, and these tokens are unlikely to be used for transactions or the development of smart contracts.
When the market goes down, we usually see the strongest companies rise to the top, and I think the same will be true for cryptocurrencies.
Follow the developers, not the hype
I think developer numbers are something important to watch in cryptocurrencies. If crypto is going to go mainstream, it will be because a real utility is being built on the blockchain by developers. This utility started with non-fungible tokens (NFTs), but will expand to decentralized finance and other areas of real and digital economies.
Ethereum and Solana seem to have a clear lead in attracting developers and building projects right now. That’s not to say they’re mature, but in the long run, these are the kind of blockchains investors should bet on. I’m not panicking right now, I’m slowly buying large assets at prices lower than a month ago. This wallet building effort starts with Ethereum, Solana and NFTs built on these blockchains.