Since October, the crypto market has lost about $2 trillion in value. Bear markets are never fun, but if you believe in the long-term value of cryptocurrencies and blockchain technology, then this is a good time to add to your holdings.
I believe Bitcoin is an important part of any crypto portfolio, as it's the most successful coin by far. However, there are also quite a few exciting crypto investment opportunities with altcoins -- a term for all cryptocurrencies other than Bitcoin. Here are my top two picks right now.
1. Solana
Smart contract blockchains have one of the best bull cases in the crypto space, as they provide the infrastructure needed for decentralized finance (DeFi) services. Stablecoins, tokenized real-world assets (RWAs), and crypto lending protocols all need a blockchain platform to operate.
Solana stands out here because it's significantly more efficient than other leading smart contract blockchains. It processes over 1,000 transactions per second (tps), block times to finalize transactions are less than 13 seconds, and transaction fees are well under $0.01.
Due to its high speed and low costs, Solana processes about 2.2 billion transactions per week, second only to Internet Computer, according to 21Shares. The caveat is that Solana keeps under 10% of the fees generated by these transactions, with most of the value going to the applications built on it.
Solana's limited value capture is a concern, but the activity levels are promising. It has also improved network reliability with the launch of its Firedancer upgrade last December.
2. Ethereum
Ethereum is the most successful smart contract blockchain, so it fills a similar role as Solana. It has over 1,700 DeFi protocols and about $53 billion of total value locked (TVL) into those protocols, ranking first by a wide margin in both categories. It also holds $165 billion in stablecoins, over half of the stablecoin market.
The biggest downside for Ethereum is that it currently doesn't have the processing capabilities of faster blockchains. It processes about 22 tps, the time to finalize transactions is nearly 13 minutes, and average transaction fees are about $0.10, which all compare poorly to Solana.
However, the Ethereum Foundation recently increased the frequency of network upgrades and is now aiming for two per year. Improving Ethereum's efficiency is one of the priorities.
You might be wondering why Solana and Ethereum are my top picks, considering they're competitors. Both blockchains have their advantages, and I'm not sure which one will be the long-term winner, or if they'll each be successful. With that in mind, I'd rather have both in my portfolio.
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