There are many good reasons to consider buying leading cryptocurrencies like Solana (SOL 1.45%) or Ethereum (ETH 0.60%), but that does not mean that every reason to invest in them is a valid one.
There's one reason in particular that has been a bit of a trap for many investors recently. Let's explore what it is and why it isn't a very compelling reason to buy either of these coins.
CRYPTO: SOL
Key Data Points
This segment hasn't flourished
For the last couple of years, there has been an argument that the next big thing for both Ethereum and Solana will be the rise of gaming coins -- coins that are meant for use in or otherwise as part of video games.
The idea sounds pretty good, at least at first. It makes sense that there might be some profitable intersection of cryptocurrency and gaming, as many games today have economic or financial mechanics that players engage with. Others feature microtransactions or in-game stores that sell items for real money. More broadly, gamifying various tasks and then paying users with crypto to complete them could be an interesting concept, assuming it could be made to work.
In practice, there is no meat on the bone here.
On Ethereum's chain, there's only one gaming-related project with a market cap higher than $1 billion, Immutable X. Its price since its launch in 2021 has been more or less straight down, so there's no evidence of slowly building investor interest here. After that, in the top 100 projects on the chain by market cap, gaming isn't represented at all. There is no way that this segment is driving any kind of demand for buying Ethereum at present. Nor did it do so in the past, despite a bunch of small projects being launched and subsequently failing.
For Solana, the picture is even more dire. There aren't any gaming coins in the chain's 300 largest assets, suggesting that it's a niche category at best. The largest gaming projects on the chain are in the $100 million market cap range, with little sign of any enduring uptrend in the number or value of projects, and few to none that even have name recognition. The segment simply hasn't broken through into the chain's main repertoire in the same way that other segments like meme coins have.
Could the future be different? Sure. But there aren't any current signs or developing trends that would encourage investors to buy Solana or Ethereum in hopes of that gaming opportunity materializing soon. So if someone pitches these coins to you as part of the investment thesis for the underlying chains, consider looking elsewhere for advice.
CRYPTO: ETH
Key Data Points
Other growth segments are looking good
The gaming space in crypto is, for now, a dud. But there's another segment that could send both Solana and Ethereum significantly higher, and it's already taking off.
Artificial intelligence (AI) projects are a hotbed of investment activity right now, especially on these two chains. On Ethereum, there are three projects with market caps above $1 billion, and a slew of others worth well above $100 million, with significant volume and a steady high rate of interest from investors on social media. Solana's AI coin ecosystem is slightly smaller, but that makes sense. As a chain, it's not as large as Ethereum, and it still has a handful of larger projects.
What's more, the AI boom is probably just starting. Both chains host numerous projects devoted to creating infrastructure that will allow AI agents to hold resources and transact on the blockchain, not to mention coins representing the AI agents themselves. Precisely how these various tokens will generate value for investors who buy and hold them is very variable, and overall, closer to being unclear than settled.
Nonetheless, if you want exposure to the upside from other investors buying those coins, you can buy and hold either Solana or Ethereum, or a little bit of both. That way, if the gaming segment does eventually take off, you'll be holding the asset that developers and investors need to purchase in order to participate in the space. That'll likely make you a bit richer, especially if you retain your holdings for a few years down the line.
