What Should Investors Be Buying Now That the Crypto Market Has 'Flash Crashed'?

Even after the latest crypto market "flash crash," Bitcoin (BTC -0.20%) is still up 35% for the year.

Bitcoin (CRYPTO: BTC) has outperformed the broader crypto market this year, but only a handful of other top coins are now in the green. To help investors decide what to buy now, let's analyze the worst- and best-performing coins.

AI crypto tokens and 'Ethereum killers' are underperforming

Two investment strategies that have not worked out as planned include AI crypto tokens and so-called "Ethereum killers." For example, Render (CRYPTO: RNDR) and Artificial Superintelligence Alliance (CRYPTO: FET) are both underperforming Bitcoin.

Among the Ethereum killers, only Solana (CRYPTO: SOL) has outperformed Bitcoin. In the meantime, Cardano (CRYPTO: ADA), Avalanche (CRYPTO: AVAX), and Aptos (CRYPTO: APT) are down significantly. Even Ethereum (CRYPTO: ETH) is up only 7% for the year.

Also, Layer 2 scaling solutions for Ethereum, which are designed to make the network faster, cheaper, and better, have underperformed. Notably, Polygon (CRYPTO: MATIC) is down 58% for the year.

Meme coins are outperforming the market, but they're risky

One category of cryptocurrency that has performed well is meme coins. For instance, Floki (FLOKI), Pepe (PEPE), and Dogwifhat (WIF) are up substantially.

However, meme coins are highly risky and offer little real-world utility. As a result, they aren't suitable for long-term investment portfolios and are more likely to lose value over time. They are also subject to extreme price fluctuations.

Solana is one of the few large-cap cryptocurrencies that have outperformed Bitcoin this year. That's primarily because Solana is the one Layer 1 blockchain that is most closely associated with the "meme coin mania" that has taken over the crypto market this year. So, in many ways, Solana is an indirect play on meme coins, without taking on as much risk.

Everyone -- including some entertainment celebrities -- now seems to be minting meme coins on the Solana blockchain, and that is leading to a huge upswing in Solana's performance metrics. Most notably, Solana's daily active users have seen a sharp spike upward. And key metrics related to decentralized finance (DeFi) -- such as 24-hour trading volume -- are also seeing a big increase. This is because Solana's decentralized exchanges are the only places where you can actively trade many of these new Solana meme coins. As a result, Solana is seeing higher trading volume than Ethereum right now.

Of course, there are other reasons to like Solana beyond just the meme coin factor. In terms of overall performance, Solana is cheaper, faster, and more efficient to use than Ethereum. This is something that Cathie Wood of Ark Invest pointed out to institutional investors last November. As a result, Solana might be the one blockchain capable of toppling Ethereum one day.

And don't forget about Solana's mobile strategy. Solana was the first major blockchain to launch its own "crypto phone" (the Saga), and mobile could be a catalyst that drives future growth.

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