What happened
Three of the top-10 cryptocurrencies in the world, Solana (SOL -2.86%), Cardano (ADA -1.59%), and Polkadot (DOT -1.07%), all saw significant selling this week. The tokens sunk 22.3%, 21.3%, and 24.4%, respectively, over the past seven days, as of 12:45 p.m. ET.
The entire crypto market was under pressure this week, seeing marked declines following a weekend rout that most major cryptocurrencies were unable to recover from. For these specific tokens, there were also individual concerns investors appear to have priced in this week.
Solana's declines appear to be related to relatively slow blockchain production over the past week. For a blockchain network that is reportedly one of the fastest, Solana's network speed dropped to approximately 500 transactions per second (tps).
For Cardano, concerns about this network's ability to roll out new updates in a quick and efficient manner appear to be plaguing the cryptocurrency. Like other large-cap tokens, Cardano is one network investors have focused on as a potential Ethereum competitor. However, the rollout of Ethereum 2.0 may diminish the value Cardano is able to provide, relative to this crypto behemoth.
This week, Polkadot was hindered by concerns about capital outflows from the alt coin network. While digital assets continue to see money flow in on an aggregate basis, where this capital flows has become a much bigger concern for investors.
Image source: Getty Images.
So what
These three tokens are all cryptocurrencies I think have tremendous potential. Whether it's Solana's lightning-fast network (which unfortunately has slowed), Cardano's proof-of-stake network, or Polkadot's interoperability focus, each of these cryptocurrencies provide unique reasons for investors to own their tokens for the long term. There's a real argument to be made for cryptocurrencies to prove their ability to generate utility for end users. In this regard, each of these tokens has something to offer.
However, sentiment in the crypto world is not great right now. These top-10 tokens are among the biggest losers in the large-cap category. Accordingly, it appears investors are rotating out of winners and potentially into a few more speculative, smaller-cap cryptocurrencies right now.
Now what
For longer-term investors who want to get into crypto but don't know where to start, each of these cryptocurrencies provides a much more attractive thesis on this dip. Sure, negative momentum can be scary to buy into on dips. However, those with a truly long-term investment time horizon may look at this dip as more of an opportunity than a sign of what's to come.
That said, momentum is a cruel operator in the crypto world. Upswings and downswings can both be prolonged, much longer than many investors would think is possible. Accordingly, remain cautious with respect to allocating capital to any one, or a number of, cryptocurrencies.
