The "Trump Bump" has turned into the "Trump Dump." Just about every cryptocurrency is down big for the year, and there are no signs yet that there will be a turnaround anytime soon. Fears around U.S. President Donald Trump's tariff declarations, combined with recession fears, have been a potent double-whammy for both Nasdaq tech stocks and cryptocurrencies.
Bitcoin (CRYPTO: BTC) is down 15% for the year, Solana (CRYPTO: SOL) is down 35%, and Ethereum (CRYPTO: ETH) is down 45%. So are any of these cryptos worth buying right now?
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We've seen this story before with Bitcoin. There's a reason why Bitcoin has acquired the reputation of being a highly volatile asset. Drawdowns of 20% to 30% are par for the course. In fact, according to Cathie Wood of Ark Invest, there have been at least five distinct times in Bitcoin's history when it has fallen by 77% or more.
And, while there's no glossing over the fact that investors are de-risking and selling Bitcoin, even the biggest skeptic has to admit that Bitcoin has held up much better than just about any other cryptocurrency. Until recently, Bitcoin had been considered a hedge against economic uncertainty. Some investors even consider Bitcoin to be a "safe haven" asset and the equivalent of "digital gold."
Image source: Getty Images.
One way to ride out the current crypto storm is by hunkering down and buying Bitcoin. You can dollar-cost average on the way down, and then dollar-cost average on the way up. This is not to say that Bitcoin is by any means "safe" -- but it has gained so much institutional adoption over the past 15 months (ever since the launch of the new spot Bitcoin ETFs) that it might just be the one crypto worth loading up on right now.
You have to make a choice here: Solana or Ethereum. They are the two leading Layer 1 blockchain networks, and both have very large, very diverse blockchain ecosystems. In short, they're the building blocks of the modern blockchain economy. That makes them very valuable. Every sector of the blockchain world -- from gaming to Web3 to decentralized finance (DeFi) -- depends on them.
From my perspective, Solana is the future, while Ethereum is the past. Solana is cheaper, faster, and more efficient than Ethereum, and that is leading to much higher future growth prospects. Granted, some of that growth has been the result of meme coin fads, but there's still a lot to like. Solana is making major headway in areas such as decentralized finance, and has a very robust mobile crypto strategy.
Ethereum is still a major DeFi powerhouse, and the Trump administration is doing everything it can to promote the idea of Ethereum becoming the building block of a modern, blockchain-based financial system. If you look through the portfolio holdings of World Liberty Financial, the Trump-affiliated crypto company, it's clear that it's positioning itself for an Ethereum-led DeFi system. So maybe Ethereum really can turn things around.
Keep in mind, though, that just because a crypto is down big for the year, that doesn't necessarily make it a great buy. Think about any experience you've ever had shopping at a "Going Out of Business, Everything Must Go" sale. Sure, some things are really cheap, but how many of them do you want or need?
In the crypto market, there's one category I'm avoiding for now: meme coins. The numbers are ugly, and I don't see a lot of hidden value. Among major meme coins, Dogecoin is down 50%, Pepe is down 70%, Floki is down 70%, and Dogwifhat (yet another dog-themed meme coin, this one wearing a hat) is down 80%. The meme coin speculative bubble burst in February, meaning that even the Official Trump meme coin is too hot to handle right now.
Of the three cryptos listed above, Bitcoin and Solana are clear buys. They've been beaten down to unreasonably low levels. Solana, for example, was a $294 coin on Jan. 19. Less than two months later, it's trading around $125.
I'm still on the fence about Ethereum, however. If you only look at its past historical track record, it seems like a no-brainer buy at current discounted prices. But it has been a market laggard for months now, even before the crypto sell-off started. If you already have Ethereum in your crypto portfolio, it's worth holding on to see if the Trump crypto team can move it higher. But I wouldn't advise adding to your Ethereum position.
Hopefully, as President Trump has suggested, the current market pain will only be temporary. If it is, you'll be glad you added Bitcoin and Solana to your portfolio at such bargain-basement prices.
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Dominic Basulto has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.