Amid rising uncertainty in the crypto market, a growing number of cryptos are now down as much as 20% over the past 30 days. Two names that particularly stand out are Dogecoin (DOGE -3.20%) and Cardano (ADA -2.78%). They have nearly identical market capitalizations ($8.5 billion), and both are currently trading for less than $1 per token.
So is this an opportunity for investors to buy the dip on a beaten-down, undervalued crypto? Let's take a closer look at which crypto is the better investment.
Dogecoin
A big factor in Dogecoin's favor is the Elon Musk connection. Ever since the billionaire acquired Twitter (now rebranded as X) in 2022, there has been enormous speculation about how Dogecoin might be integrated into the social media platform. Back in April, Musk even went so far as to swap out the image of the iconic Twitter bird for an image of the Dogecoin dog mascot.
The current thinking is that Musk might decide to integrate Dogecoin as a crypto payment option within X, which recently received a new license for crypto trading, storage, and transfer. If X is serious about adding crypto payments, Dogecoin could gain access to X's more than 500 million users, potentially transforming Dogecoin into more than just a silly meme coin.
But there are a lot of "ifs" here, and much of that speculation is not supported by any real evidence. There's a good reason Dogecoin is down 20% over the past 30 days and 14% year to date. The "Elon Musk effect" seems to be wearing off, and many investors are getting tired of waiting for Dogecoin to grow up. Formed as a joke meme coin nearly a decade ago, Dogecoin still has much the same functionality as when it was first created. Even more worrisome, Shiba Inu appears to have supplanted Dogecoin as the preferred viral meme coin for short-term speculators.
Cardano
Unlike Dogecoin, which has little to no utility, Cardano has aspirations of one day unseating Ethereum (ETH -0.66%) as the top Layer 1 blockchain network. Tech upgrades over the past two years mean that Cardano now offers functionality comparable to Ethereum, and there has been significant growth in two key blockchain segments: non-fungible tokens (NFTs) and decentralized finance (DeFi). Cardano now has the highest market cap of all the so-called "Ethereum killers" (the blockchains capable of perhaps replacing Ethereum).
Image source: Getty Images.
The problem is that Cardano still remains a "ghost chain" in the eyes of many investors. While Cardano has a huge network of developers, as well as a huge repository of code for developers to use in their new projects, the level of activity on the Cardano blockchain -- as measured by metrics such as daily transaction volume -- has never quite lived up to the hype. Until these metrics improve, many investors are unwilling to trust Cardano.
Cardano, which is down 18% over the past 30 days, also faces an additional challenge: SEC regulatory scrutiny. Back in June, the SEC named Cardano an "unregistered security" in its lawsuits against Coinbase Global and Binance, and that has created enormous fear, uncertainty, and doubt (FUD) in the marketplace about Cardano. Taking a look at Cardano's chart for the year, it's easy to see how the price of Cardano fell off a cliff in early June.
The long-term investment outlook
If I were forced to choose between these two bargain-basement cryptos, my pick would be Cardano. Yes, the regulatory risk is not going away soon, but in terms of overall utility, it's hard to argue with what Cardano offers: a world-class Layer 1 blockchain supported by a growing ecosystem of apps and projects. Cardano's core metrics appear to be improving, especially when it comes to total value locked, a key metric used to evaluate overall strength in decentralized finance. Dogecoin, by way of contrast, is still just a meme coin highly dependent on the Elon Musk narrative for any upward movement.
That being said, Cardano is far from a slam dunk. Investing in crypto is always risky, especially for any crypto trading for less than $1. Thus, Cardano is much more of a long-term investment play. It's probably not a breakout candidate for this year, simply due to all the uncertainty currently hanging over the crypto market right now. Still, it could be another story entirely in 2024.
