Solana Teaches Crypto Investors a Critical Lesson

Crypto Market Musings

• As expected, bitcoin continues to trade in a fairly tight range between $28,000 and $30,000.
• Most other coins are loosely tracking with bitcoin.
• There are some exceptions, though. Tron, for example, is up about 17% in the last 30 days.
• If you’re looking for future bumps in the road, circle June 14 and June 15 on your calendar. That’s when the Fed will likely raise interest rates another 0.5%. In theory, the well-telegraphed rate hike should be priced into the market. But with everyone worried about inflation right now, the markets will likely respond. And more selling pressure seems to be the likely outcome.
• Call it informed speculation, but look for 0.5% hikes in both June and July. In the remaining Fed meetings (September, November and December), I expect one more 0.5% hike and two 0.25% hikes. That gets the federal funds rate around 3%, which is where I believe the Fed wants to be by the end of the year.
• If investors believe inflation is slowing down or will be under control following the last rate hikes, confidence across all asset classes — including crypto — should increase. And we might see some buying pressure increase then.
• But that’s a big IF. And until then, the bears will be out. So be careful out there. Only invest what you can afford to lose. And make sure you do your homework on any bargain crypto shopping.

What Vin Is Thinking About

Solana giveth. And Solana taketh away.

Solana – currently one of Ethereum’s top competitors – has had an interesting last seven days.

On Thursday, Alchemy announced it was offering its services to the Solana ecosystem. Alchemy is a Web3 development platform that makes it easier and quicker to build apps. If you’re looking for an internet comparison, Alchemy is like Amazon Web Services for blockchain technology.

Alchemy is a startup itself. It has a $10.2 billion valuation and is backed by an all-star crew of investors, including Lightspeed Venture Partners, Silver Lake and Andreessen Horowitz (a16z).

NFT marketplace OpenSea is the most well known project built using Alchemy tools. So Alchemy adding Solana support is a significant — and positive — development.

But this week, Solana stopped working for more than four hours. Doh! It’s the second time in a month that Solana has been down.

Solana’s price dropped almost 14% to $38.52 as a result of the outage. It’s rebounded since then and is trading around $40.38 as I write.

Outages are not good. And if Solana isn’t careful, it will earn the dreaded “reliably unreliable” marker. But Solana has turned into a very popular Ethereum competitor. The project has some incredibly smart people working on it. It should be able to work its way through these issues. 

The most important lesson crypto investors should take away from this saga is that paying attention to the project — and not just price action — is a critical part of the investment process. The projects matter. Technology matters. Execution matters. Adoption matters. The savvy crypto investors investigate all of these (and more) before deciding to invest.

And Finally…

You can buy food at Chipotle using crypto now. I love Chipotle more than most. Its burritos — and burrito bowls when I’m feeling more health conscious — are delicious. But I have no plans to use crypto to pay for food there. I’m not sure who actually wants to do that. But if that’s your thing, you can do it now. Enjoy.