Meme coins and Layer 1 blockchain networks are taking the brunt of Trump’s new policies while Bitcoin and XRP are relatively unaffected. President Donald Trump’s latest tariffs appear to be taking a toll on cryptocurrencies; only some, like Bitcoin (CRYPTO: BTC) and XRP (CRYPTO: XRP), seem to be riding out the storm. Most other major cryptocurrencies have suffered a minimum 20% loss within this year. However, two broad categories of cryptocurrencies — meme coins and layer 1 blockchain networks — seem to suffer the most from the authoritarian market conditions catalyzed by these tariffs.
Layer 1 Networks Taking the Brunt
Blockchains that support independent applications, including meme coins, have taken a hefty hit and are layer 1 networks. These include Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), Cardano (CRYPTO: ADA), Sui (CRYPTO: SUI), and Avalanche (CRYPTO: AVAX). These assets too, in spite of their downturns, boast market capitalizations above 9 billion and are ranked in the top 15 cryptocurrencies globally.
Nonetheless, the source suggests that a significant number of investors appear reluctant to work with them in the current landscape.
Among these Layer 1 networks, Ethereum lags farthest behind. While Solana and Cardano are said to be down an uninspiring 20% on the year as of April 24, Ethereum’s performance is labeled as an “eye-popping” 46% decline for the same period. Ethereum is viewed as having the weakest investor sentiment among its closest competitors. It seems the market perception gap between Ethereum and its nearest rivals is narrowing. The source cites this trend as surprising, especially since Ethereum is the second largest cryptocurrency with a market cap of nearly $220 billion. Alongside Bitcoin, it is also one of only two cryptocurrencies with a spot ETF, or exchange-traded fund, available to investors. Moreover, Ethereum holds the exceptional record of being one of theonly two digital currencies capable of sustained high returns, delivering superlative returns on investment over the past 10 years on repos on crypto. Even while declining, it’s reported Ethereum still holds some backing from the Trump administration, who, in March, made it the centerpiece of their new U.S. Digital Asset Stockpile.
Including President Trump, members of the Trump family have defended Ethereum on social media. Likewise, the Trump family-affiliated crypto company, World Liberty Financial, has also included Ethereum as one of the principal assets in its portfolio.
Steep Decline of Meme Coins
If there are any types of cryptocurrency that are performing worse than Layer 1 blockchains in this market, it would be meme coins. According to reports, the environment catalyzed by the new tariffs has created a pronounced risk-off attitude among market participants. From this perspective, meme coins haven’t had any strong justificatory reasons to rally for months. This is reflected in the performance of major meme coins through the lens of sentiment as of April 24. The leading meme coin by market cap, Dogecoin (CRYPTO: DOGE), is said to be down 45% on the year. Its closest rival, Shiba Inu (CRYPTO: SHIB), is down 37%. The third-largest, Pepe (CRYPTO: PEPE), has nosedived 53%. The official Trump meme coin (TRUMP), the fourth-largest, has suffered what some would describe as a face-melting 84% decline from its January debut.
Through this type of market activity, investors are sending a pretty clear message: Stay away from meme coins.
As stated in the source, prior to imposing tariffs, meme coins were viewed as speculative, high-risk investments. In the current context, they are described as ‘complete dumpster fires.’ Not too long ago, Cathie Wood of Ark Invest supposedly claimed that almost all meme coins will be rendered virtually worthless in the near future. The source notes, while some of these meme coins may experience short-lived peaks, such price increases are most likely temporary and referred to as “dead cat bounces” (in the context of Dogecoin and Shiba Inu, this is humorously termed “dead dog bounces”). It is suggested that this group of assets is particularly bad to invest in at this time, meaning those purchasing animal-themed meme coins are granting “exit liquidity” to earlier investors who are substantially underwater.
Looking for Value
According to the source, it is hard to ignore the fact that multi-billion dollar digital assets have been marked down 20 to 50% in a matter of months, directly appealing to the value-seeking investment thesis. Yet, the scenario brings up the concern of whether any effective opportunities do exist in-between the declines while navigating through beaten-down cryptocurrencies.
A Possibly Unique Case
Even though overall, other Layer 1s are suffering, Solana is provided as one cryptocurrency that is worth looking at in the current landscape.
Even with the unclear picture of tariffs, it looks like Solana’s blockchain activity is beginning to get busier. Solana also receives mention of having conspicuously emerged as the foremost challenger to Ethereum, which the source refers to as currently “mired in an existential crisis.” Additionally, the source attributes performance to Solana in the past as proof of its ability to make significant price swings, citing the fact that in 2023, Solana skyrocketed over 900%.
Bitcoin—the Stronger Choice
The source further reinforces that worries around recession, inflation, and even a trade with tariffs have led to very little interest in most cryptocurrency investments. In this regard, Bitcoin is still the leading cryptocurrency in focus during tariff uncertainty. ‘Historically, Bitcoin has shown stronger resistance compared to other cryptocurrencies during periods of economic and political turmoil,” the source states. Because of these factors, Bitcoin is recommended as potentially the number one choice for investors looking to hedge against a global economic downturn.
Analyst Commentary
One last thing concerning investment guidance is the Ethereum consideration. The source cites the Motley Fool Stock Advisor analyst team, which has identified what they consider the 10 prime stocks to buy right now. It is worth noting that Ethereum was not mentioned within those 10 stocks, which implies that the analyst group had a considerably more favorable view of traditional stock investments at this point in time.
