Got $2,500? Avoid These 3 Cryptocurrencies and Don't Look Back

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6 days ago

Key Points
Your investments need to have a plausible mechanism for gaining in value.
Hope is not a mechanism.
The same goes for unimplemented plans or promises.
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If the story behind a crypto coin boils down to a punchline, a cult of personality, or a poorly defined promise to be part of the future of finance, it's time to consider walking away. Over the long term, markets reward scarce assets that solve real problems, not social media spectacles.
Today's crypto landscape is littered with distractions, but three names in particular stand out, and largely for all the wrong reasons: Dogecoin, (CRYPTO: DOGE) Shiba Inu, (CRYPTO: SHIB) and Cardano (CRYPTO: ADA). Two of these names offer plenty of excitement, but none offers a convincing potential for risk-adjusted payoff for patient investors, and they aren't worth investing even a moderate sum of $2,500.
Memes often don't age very well
Memes can move prices, but they rarely build durable value, and this issue is front and center for meme coins for obvious reasons.
Dogecoin's branding relies on a combination of jokes from yesteryear and celebrity whims. Posts from Elon Musk -- the self-proclaimed "Dogefather" -- have historically had a habit of sparking double-digit moves.
Yet its fundamentals remain absent. In fact, the few fundamentals that there are to analyze, like its circulating supply, are unfavorable, as the coin is inflationary by its design, meaning that new supply is steadily issued. That unlimited inflation puts a ceiling on scarcity, which is exactly the opposite situation of what long-horizon investors need.
Similarly, Shiba Inu's pitch isn't scarcity either, despite what some would tell you.
Holders trumpet high token burning rates, but even the most intensive recent burning periods wiped out less than 0.00002% of supply, and the price still sagged. There's no reliable mechanism to burn tokens built into the coin, so all burning is voluntary. Would you be willing to literally light your money on fire to prop up a token's reputation? Probably not, and very few others are consistently willing to do it either.
Could either meme coin go "to the moon" again? Sure, anything can happen, and in the long run, probably there will be a confluence of sentiment and permissive macroeconomic and liquidity conditions that will make these coins run, at least temporarily.
But buying these assets and hoping for that outcome is not a prudent use of your capital, and your odds of successfully timing the market are low.
Cardano is having trouble gaining ground
Cardano is basically the opposite of a meme coin in that it attempts to ground its tech development cycle heavily in peer-reviewed research, community consensus-building, and incremental upgrades that don't break functionality. It's a serious blockchain that's built and maintained by skilled developers.
On paper, the chain looks sleek. It's faster and cheaper than Ethereum on average.
But in practice, usage is thin. The chain hosts barely $361 million in total value locked (TVL). Its stablecoins are, by the decentralized finance (DeFi) sector's standards, barely liquid, with just $32 million in value.
Its number of active wallets demonstrates the impact of the issue here. Roughly 28,000 addresses moved the coin in the 24 hours ending at noon on July 25, a rounding error next to Ethereum's daily user counts. Meanwhile, the DeFi share of Cardano's total value hovers around 0.3% of the sector -- it's practically nobody's first, second, or third choice for developing or using DeFi applications.
Nothing inherently prevents Cardano from catching up over the next few years, and its roadmap is full of scaling and governance milestones that might help it along.
The problem is time. Thanks to the chain's enduring focus on carefully planned and largely democratically conceived and community-implemented upgrades, each potential upgrade slips further into the future as researchers pursue perfection, and rival chains keep hoovering up developers, liquidity, and attention.
Investors betting on a Cardano renaissance must thus assume competitors will stand still, and they almost never do. If anything, they've lapped the chain in critical segments like on-chain AI agents and stablecoins, not to mention many others. In theory, the network's academic rigor could pay off years down the line. In practice, capital tied up for "the next couple of years" earns no yield and faces real opportunity cost while faster networks already monetize users.
In short, Cardano is still searching for product-market fit. If you've got only $2,500 to allocate, look for assets that are scarce, widely used, and generating revenue. Cardano, Dogecoin, and Shiba Inu aren't there yet, and they may never be.
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Alex Carchidi has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.
Got $2,500? Avoid These 3 Cryptocurrencies and Don't Look Back was originally published by The Motley Fool