This week was the culmination of many years of promise to come in the crypto industry. President Trump has ended some crypto regulation through enforcement actions taken in recent years, and the Securities and Exchange Commission (SEC) rolled back SAB 122, which blocked banks from holding the crypto for customers. But these moves did not help the market, and many Altcoins fell by double digits during the week.
According to data provided by S&P Global Market Intelligence, Cardano (Ada -3.61%) was one of the biggest losers, down 13.6% over the past week, Peas (POINT -2.43%) fell by 14.4%, and Uniswap (UNITED -5.40%) fell 15.4%.
Crypto Regulations Not Provoking Buying Frenzy
This week was more like “Sell the News” in crypto because it was a lot of news that the industry was looking for, but the buyers didn’t show up. In fact, whale investors sold 180 million Cardano tokens this week despite potentially better market conditions.
I have been saying for months that better market conditions for crypto from a regulatory perspective would not necessarily lead to higher prices for all cryptocurrencies. Tokens must have demand for improvement and companies building innovative products on the blockchain does not necessarily lead to higher demand for the tokens themselves.
MEME Trump Coin Undermines Bull Case for Some Cryptocurrencies
The other big news of the week was the launch of the Trump Meme Token last weekend, which did not launch on the traditionally popular Ethereum (Eth -3.20%) Layer 2 solutions like Polkadot; it was launched on Solana (GROUND -7.24%). As a result, it also doesn’t use common ethereum exchange tools like uniswap; It uses Solana’s native token exchanges and wallets at an incredibly efficient scale.
Solana has completed almost 300 million transactions in the past month and has held up well to the new meme coin. And if it can handle that, why use slower, more expensive Layer 2 solutions?
UniSWAP is also losing market share on a volume basis and would be at risk if crypto activity moved to Solana, where smaller transactions make more sense due to much lower fees than most competing blockchains.
In short, Solana has sucked the air out of the room for Polkadot’s competitors to Cardano, and it’s no surprise to see them fall this week.
Now the rubber is coming to the road
What is clear now is that crypto has momentum, and there will likely be a lot of innovation on blockchain, particularly as advisor David Sacks said today that coins and Non-loot tokens (NFTS) are collectibles. But what does this mean for native blockchain tokens?
It is not clear that all blockchains will be pulled, and even if they do, the value may not be in the token but rather what is built on top of the blockchain. I wouldn’t be surprised to see the market drain even more as some of the election and meme euphoria wears off, and builders start to create real businesses. But that could take years to materialize, and that’s not the kind of patience the crypto market typically has.
Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions and recommends Cardano, Ethereum, Solana, and UniSwap protocol token. The Motley Fool has a disclosure policy.
