What happened 

The news in the crypto market continued to get worse after Tuesday's de-peg of TerraUSD (USTC -3.51%) from the U.S. dollar, as well as the drop in Bitcoin (BTC 0.44%). This has effectively caused a cascade of selling and has led to outright panic in some circles. And even the most useful crypto assets are down big Wednesday. 

At noon ET, the value of Ethereum (ETH -1.05%) had fallen 3.6% in the prior 24 hours, Solana (SOL 0.46%) had dropped 19.9%, and Cardano (ADA -1.44%) was down 13.2%. 

A digital Bitcoin falling apart.

Image source: Getty Images.

So what 

The biggest news of the day was that the TerraUSD stablecoin lost its peg to the dollar. That token's value fell to as little as $0.30 or so, and as of late Wednesday afternoon, was still only at $0.63. This crisis in what was viewed previously as a safe asset has created a cascade of impacts and drops in the prices of nearly all major tokens. According to Coinglass.com, $859 million worth of cryptocurrency positions have been liquidated in the last 24 hours alone, and if prices continue to fall, that number will likely go higher.

When such big tumbles occur, broad panic can set in. That's what we're seeing Wednesday with relatively smaller market cap tokens, like Solana and Cardano. Selling leads to more selling, and because those tokens have no tangible assets to fall back on, there's no clear floor underneath their prices.

Ethereum, which is a top token for use in smart contracts, was actually holding up relatively well, which shows some of the strength in leading cryptocurrencies on a relative basis. 

It doesn't help that the stock market is also dropping this week. The quarterly earnings reports that companies have been delivering haven't been as strong as some investors expected, and that's leading to a further "risk off" trade in the market. Cryptocurrencies are highly risky, so in this environment, there are naturally going to be a lot of sellers. 

Now what 

It certainly looks like all-out panic is setting into the crypto market. Investors are getting liquidated in some cases, and some of the investment theses behind cryptocurrencies are falling apart. 

What's special about Ethereum, Solana, and Cardano is that they're all utility tokens, allowing developers to build applications on top of their blockchains. And billions of dollars are flowing into the cryptocurrency development ecosystem, which will lead to innovations over the next decade or more. In time, that should drive values higher, although we don't know when those upsides might be seen. 

I think we're starting to see the panic in the market reach a peak, and similar moments have typically been buying opportunities for great long-term assets. In cryptocurrency, I think the lasting tokens and blockchains will be those that developers use most to provide digital or real-world utility for users. These three cryptocurrencies are on the top of that list.

That said, there's likely to be more volatility ahead, and this may not be the bottom. So, investors buying now should be prepared, because these are long-term investments, and in the near term, trading in crypto can be unpredictable, as was demonstrated again this week.