Why Solana, Cardano and Polkadot went under today

What happened

The cryptocurrency industry is having a rough day as almost all assets are down double digits or more. Some of the smaller utility tokens are down a lot even after bouncing off their lows in the past few hours.

As of 2 pm ET, during the last 24 hours, Solarium (SUN -5.16%) has dropped by 15.2%, Cardano (ADA -1.75%) has fallen by 10.4%, and Moles (POINT -2.94%) has dropped by 10.4%.

And that

The biggest news today is that Celsius Network, which is a decentralized finance application, has frozen transfers and withdrawals due to market volatility. That caused a panic in the market because users cannot sell positions and cannot even repay loans that may be on the platform.

Binance, which is the largest cryptocurrency exchange in the world, also stopped Bitcoin withdrawals due to a “stuck transaction”. Add these two pieces of news together and investors are understandably concerned that the decentralized nature of some of these products may not be as secure as they once thought.

It is worth noting that the crypto industry is still relatively young and has grown rapidly in recent years, but it has not been stress-tested like it is now. Stablecoins are under pressure, decentralized finance protocols are failing, and even Bitcoin is falling. If you are an investor, it can feel like there is nowhere to go.

Now what

The cryptocurrency industry has grown at an explosive rate in the last couple of years, in part due to all the trading money that has poured into the industry. But that trend has reversed as the stock market has fallen, the Federal Reserve has raised interest rates and reduced quantitative easing, and cryptocurrencies have begun to show more cracks.

What Solana, Cardano and Polkadot have in common is that they are utility tokens and developers can use their blockchains to create a digital utility. This can be anything from decentralized finance projects to non-fungible tokens (NFTs). But the industry is very early in the development of these business models and the value of these cryptocurrencies is probably ahead of where the development of blockchain was.

That said, I think it’s important to note that billions of dollars will flow into cryptocurrencies and the Web3 project in the next few years and immense value is likely to be created, just like when the internet was in its infancy in the 1990s. It will take time. , but patient investors who are adding exposure to major cryptocurrencies will be winners in the long run.

However, it is unclear where the bottom of crypto securities is, and this sell-off could last much longer. For now, fear has gripped the market, and if that continues, cryptocurrency valuations could continue to fall.

Leave a Comment