Ethereum (CRYPTO: ETH) may be down 69% for the year, but its rivals are getting crushed even harder. Layer 1 blockchain networks like Avalanche, Fantom, and Solana (CRYPTO: SOL) have all experienced losses of 90% or more since the beginning of the year. In point of fact, they are among the cryptos that have performed the poorest across the entire market.
This sudden and severe decline has been enlightening. Each of these cryptocurrencies was touted as a potential “Ethereum killer”. During the most recent bull market surge in the cryptocurrency industry. But that was before The Merge, and the cryptocurrency market is sending a clear message right now: Nobody needs “another Ethereum” these days. Is it advisable to invest in any of these alternative cryptocurrencies instead than Ethereum?
Consolidation of the market
In the aftermath of The Merge, there will very certainly be a significant amount of market consolidation, and this is the big picture. Before The Merge, there was a need for blockchain networks that were both faster and cheaper. And they needed to be able to perform everything that Ethereum could do. Following The Merge, there is no longer a requirement for this. In the current climate, it is nearly hard to out-Ethereum Ethereum, particularly with the growing popularity of Layer 2 scaling solutions that assist solve any remaining shortcomings. What do we get in the end? If a Layer 1 blockchain network makes the assertion that it can become “the next Ethereum,”. Then the market will almost certainly have extremely high expectations for that network.
This is not to suggest that the winner takes all mentality applies to the Layer 1 blockchain environment. After the crypto winter is over, the most important question is going to be what the market structure of the Layer 1 blockchain area is going to look like. When blockchain networks are compared to mobile phone networks. One conclusion that may be drawn is that there may be a situation in which a small number of major businesses dominate. In the same way that the majority of people use only one of a small number of countrywide mobile network carriers. And no provider has a true monopoly on the market. It is possible that the same thing will happen in the realm of Layer 1 blockchain technology.
Is Solana truly capable of competing with Ethereum?
In light of this information, I believe that Solana is the only one of these Ethereum challengers that is currently deserving of investment capital. As an illustration, Solana is the only Layer 1 that has a strategy for mobile cryptography. At the beginning of 2023, Solana intends to release a “crypto phone”. That will make it significantly less difficult to interact with cryptocurrencies via mobile devices. This has the potential to fundamentally alter people’s perspectives on mobile applications, cryptocurrency wallets, and Web3.
Second, Solana is perhaps the only major Layer 1 blockchain network that has invested in a consumer-facing brand. This is because Solana is the only one of the main Layer 1 blockchain networks to have done so. Late in the summer, Solana launched the very first cryptocurrency retail store ever established in the Big Apple. After this, in October, it opened a second cryptocurrency retail store in the city of Miami. However, Solana does not refer to these establishments as retail outlets. It prefers to refer to them as “embassies” due to the fact that they are locations. Thiswhere ordinary crypto enthusiasts from all walks of life can congregate for extended periods of time.
That is not to imply, however, that putting money into Solana is not fraught with a great deal of danger and uncertainty. Solana is currently being scrutinized as a result of the fact that its connection to Sam Bankman-Fried, FTX, and Alameda Research. It has just come to widespread public attention. It’s not hard to understand why Solana has been able to grow at such a rapid pace now that we have the benefit of hindsight. In spite of this, Solana emphasizes that the company still has 30 months of runway left. Until all of its money is spent, implying that there is no reason to be concerned just yet.
It is time to purchase Ethereum
If you are thinking about investing in the Layer 1 blockchain space right now, your best bet is to just invest in Ethereum because that is the option with the least amount of risk. When you invest in Ethereum, you are doing so in the product that is widely regarded as the market leader. Ethereum still boasts a market share of greater than 50% of all blockchain activity that is taking place these days. Despite the fact that it has the largest group of blockchain developers of any platform in the world. On the other hand, competitors like Avalanche and Fantom only control a very small portion of the pie.
There was a time when there was a significant demand in the market for “Ethereum-killers,”. But it appears that Ethereum has emerged victorious. During this period of maximum market risk and uncertainty, the time has come to invest in market winners rather than market losers.
Ethereum’s Crash
What goes up must come down, as Sir Isaac Newton said. The bitcoin market collapsed, and some say it still does. Ethereum unfortunately led again. ETH fell 73% to $370 in three months. Bitcoin was at $6,600, 66% below its all-time high.
While the market sought to restore some of its value in the summer of 2018, the rest of the year remained violently negative. Ethereum was $133,49 and Bitcoin $3,700. The latter lost 90% in a year.
Most markets started 2019 well. Ethereum and Bitcoin experienced price increases. And by the summer, the former was selling at $333, but the latter reached about $14,000. At that moment, it was pretty evident that Bitcoin’s place as the largest cryptocurrency by market cap remains undisturbed. Moreover, even if both are currently down since the year-to-date high, ETH’s decline is more substantial. In reality, Ethereum is practically at the end of 2018 level. While the price of BTC is around $7,200 presently – twice from where it started the year.
