There's one new paradigm in play that might make Cardano (CRYPTO: ADA) a better cryptocurrency to buy than Solana (CRYPTO: SOL). It doesn't have much to do with the technology underpinning either chain, but it is something that investors should probably know about today rather than when it might start making a price impact, which could take a few years.

Let's analyze what's going on and determine whether it makes Cardano worth considering, or whether it will continue lagging behind.

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The pace of ecosystem development matters

One of the most important factors supporting an investment thesis for buying a coin is whether there is a lot of activity on its chain. When projects on a chain are appealing to users because they offer an important decentralized finance (DeFi) service or other valuable capability, it attracts capital, boosting the price of the native token in the process. At the same time, if there's no compelling reason to park capital on a chain, money tends to flow elsewhere to find a return via investment, or to be used to pay for utility of some kind.

For investors, understanding the level of activity on a chain is not enough to make a sound decision. Instead, getting a sense of how much activity might increase in the future is key, as it's future usage that would drive prices up for those who invest today. There's no surefire way of determining whether a chain will be more in use in the future than it is today, but if there are a lot of interesting or valuable projects in development in the chain's ecosystem, it's a vote in favor of there being future demand.

Cardano is significantly smaller than Solana, with a market cap of $23.6 billion compared to the other coin's market cap of $74.3 billion. Therefore, with all else being equal, one would expect that the volume of ongoing software development for the projects hosted on each coin's ecosystem would be proportional to the chain's size, suggesting that Solana would have roughly 3 times as much development activity as Cardano.

It's difficult to measure how much software development activity is going on, but there are a few composite metrics that can approximately track how many times developers make substantive additions or changes to a chain's projects. One such composite metric, created by the crypto data provider Santiment, shows that Solana experienced around 464,000 ecosystem development events in the last 12 months, whereas Cardano experienced 389,900 events. So Cardano is seeing a huge amount of developer activity in its ecosystem for its size, and it isn't just a blip.

There's more than one factor that's relevant here

Experiencing more developer activity on its chain relative to Solana is not a slam dunk as far as making Cardano worth buying.

Cardano has a couple of substantial disadvantages that still make it a less appealing investment than Solana. First, it's more expensive and slower to transact on. Making a swap on Solana takes about a second and costs a fraction of a penny, whereas the same action on Cardano takes a few seconds at best and costs roughly $0.20 on average. That incentivizes more developers to develop applications on Solana over the long term.

Second, Cardano's ecosystem is nowhere near as diverse as Solana's, nor is it as vibrant today. It's nearly completely missing out on critical growth segments like artificial intelligence, as well as less-serious but still capital-attractive segments like meme coins. Other important categories, like stablecoins on the chain, are incredibly small for Cardano's size compared to the equivalent assets on Solana. So it has fewer opportunities for capital to flow in, and a weaker set of tools to accommodate users or investors interested in large transaction sizes.

Thus, while it's undeniably bullish for the chain to have a lot of development activity relative to a much larger chain, constituting a moderate-strength reason to consider making an investment, it's more than offset by the mediocre health of its ecosystem today. There isn't a strong reason to buy it over Solana.

It's possible that might change over the coming years, especially if its activity ramps up even more. But investors should be aware that such activity is only an investable factor if it's being directed toward producing real projects of value. And so far, Cardano simply isn't the home for the projects cryptocurrency investors are finding to be valuable today.

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Alex Carchidi has positions in Solana. The Motley Fool has positions in and recommends Cardano and Solana. The Motley Fool has a disclosure policy.

It might sound strange at first, but stablecoins are soaring these days.

I don't mean that the price of Tether (CRYPTO: USDT) or USD Coin (CRYPTO: USDC) is skyrocketing, of course. They are going nowhere from that perspective, essentially pinned to the $1.000 price point as expected. But the entire category of stablecoins is gaining momentum, with lots of new names on the market and a rising tide of trading volumes.

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So let's look at the surging stablecoin category. The calmest corner of the cryptocurrency market can be surprisingly exciting.

What makes stablecoins so... stable?

First, let's think about what stablecoins are good for.

These digital coins have several functions in the crypto world.

With a price permanently pegged to a traditional fiat currency such as the US dollar, the euro, or the Japanese yen, they are a helpful tool for crypto-trading exchanges and banks. Exchanging dollars for Tether or USD Coins is very straightforward, and then you have a crypto-based representation of simple dollars in your digital assets account. From there, you can use the stablecoins to buy other cryptocurrencies, without raising currency exchange questions by involving actual dollars again.

The leading names have become extremely stable over time. Tether prices fluctuated wildly in 2016, ranging from $0.10 to $2.01 when the very concept of stablecoins was new and unproven. The newer USD Coin had a lighter bout of volatility just after its launch in 2018, rising as high as $1.04. But Tether quickly stabilized and hasn't moved more than 1.1% away from a perfect $1.00 in the past five years. USD Coin took a quick 3.4% dip amid the collapse of the experimental Terra stablecoin in 2023.

Any respectable stablecoin looks like a straight horizontal line next to the S&P 500 (SNPINDEX: ^GSPC) stock market index, other cryptocurrency prices, or any other fluctuating economic data point. Here's a five-year stablecoin vs. S&P 500 chart for your amusement. The big blip of USD Coin uncertainty in 2023 is barely visible:

Tether Price data by YCharts

Beyond Tether: The expanding stable of stablecoins

Tether was the first name in the stablecoin game, and it's still the largest and most widely used option. It's essentially your only choice if you want to use a stablecoin that is independent from specific crypto exchanges.

USD Coin was launched by a group including Coinbase (NASDAQ: COIN). It's no surprise to learn that Coinbase defaults to using USD Coin across its trading platforms. That's not the only place you can buy, sell, and hold USD Coin, though. Every major crypto exchange supports it, and there are far more USD Coin transactions on Binance than on Coinbase.

The Sky.money crypto-trading platform is an interesting case. Coinbase launched the USD Coin, but Sky.money worked the other way around. This system started with the USDS (CRYPTO: USDS) stablecoin, formerly known as Dai and Maker. The rest of the trading platform was built around the quirks and requirements of USDS. Sky.money may not ring a bell, but USDS is the third-largest stablecoin by market cap.

And there are many more. For example:

• The Ripple Foundation launched a Ripple USD (CRYPTO: RLUSD) stablecoin in December, basing the coin on US dollars and the XRP (CRYPTO: XRP) cryptocurrency. This coin is helping Ripple's payment services execute international money transfers, serving as a super-liquid pool of cash-backed assets.
• The Tether Holdings group could soon introduce a second version of the Tether coin, specifically aimed at large institutional investors in the United States.
• And this could be the start of a large trend. Asset manager giant Fidelity Investments is planning a stablecoin. Even larger firm Blackrock (NYSE: BLK) introduced one in March 2024. Even Bank of America (NYSE: BAC) is open to the idea of an in-house stablecoin, depending on how American regulations will shape up around this opportunity.

So the stablecoin legion is growing larger and more diverse.

Stablecoin trading volumes speak volumes

Whether you're looking at Tether, USD Coin, or USDS, their average daily trading volume has been bubbling up over the last two years.

Tether's average transaction volume stood at $19 billion in early April 2023. Now it's up to $182 billion per 24 hours. USD Coin's volume rose from $6 billion to $28 billion over the same period. The Dai/USDS ecosystem surged from $130 million per day to $2.7 billion.

This is more than empty talk. People (and automated trading algorithms) are putting these stablecoins to work. In all fairness, the rising interest applies to non-stablecoin cryptocurrencies, too. Bitcoin's daily trading volume is up from $9.4 billion to $101 billion, for instance. But the stablecoin community is taking advantage of broader public crypto interests.

More than just trading tools

Stablecoins can do more than just facilitate trades between fiat currencies and cryptocurrencies. Their powers are growing over time, since every new stablecoin option wants to win customers and usage with their unique features.

Some of them offer generous interest rates, putting most savings and money market accounts to shame. The spare cash in my Coinbase account is earning an annual percentage yield (APY) of 4.1% right now. That's comparable to the best money market yields on the market today.

A few stablecoins rely on a specific blockchain system, like the XRP-based Ripple USD coin. Others pick a proven coin-launching foundation such as Ethereum (CRYPTO: ETH) or Solana (CRYPTO: SOL), depending on their technology to provide data security and smart contract functions. And then there's Tether, which provides transparent support for more than a dozen blockchain networks. That's a diverse approach, protecting Tether holders against platform-specific risks. Tether can always untether itself (har-de-har-har) from any risky or flawed solution, relying on a dozen alternatives instead.

So you see, there's plenty of buzz in the stablecoin sphere right now. There are plenty of alternatives for good reason. These mega-stable coins (often with lucrative yield rates) may look especially attractive when the broader crypto market is experiencing wild volatility, like this week.

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Bank of America is an advertising partner of Motley Fool Money. Anders Bylund has positions in Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has positions in and recommends Bank of America, Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.

With the market teetering on the edge of disaster due to concerns about tariffs and an economy that might be trending toward recession or potentially even already in a state of recession, now is a frightening time to be thinking about buying anything, especially a cryptocurrency like Bitcoin (CRYPTO: BTC).

There's a significant chance that every dollar invested into the market right now might be worth a bit less for quite some time. And, especially if there's an economic downturn that's sharper than anticipated, investors might find themselves short on cash to cover expenses if they over-commit to any single investment.

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Nonetheless, I'm still willing to buy Bitcoin hand over fist right now. I don't expect that to change, even if there's a bear market or if the economic headwinds grow fiercer than they already are. I feel good about my strategy here, so let me explain why it will probably work.

Loading up right now is a smart move for the long term

As you've probably heard, the whole point of Bitcoin is that it's an asset that nobody can issue more of, in contrast to a fiat currency. You've probably also heard that Bitcoin gets more difficult to mine over time, meaning that its supply will grow very slowly in the future. That implies a pair of things which make it an easy asset to keep buying no matter the economic conditions.

First, the scarcity mechanism of Bitcoin means there's a big incentive to buy it today rather than next year. In the future, it will be harder to produce, so when you go to buy it, you will be competing over a smaller quantity of new coins coming on the market. If there's a major recession today, it won't change anything about these basic factors, although it may push the price lower for the near future. But if you're investing with a long time horizon, the price on any specific day or even in any given quarter does not matter so much as the probability that the price will be considerably higher when you plan on selling years in the future.

And there's nothing about a recession that is going to make Bitcoin easier to produce, regardless of whether it's caused by tariffs or war or mismanagement or anything else. Remember, Bitcoin mining operations are spread around the world, so even if one country is experiencing dysfunction, miners elsewhere will still be able to keep the chain alive -- and if there's a disruption to miners, it will only slow the supply growth even more.

Second, much of the concern surrounding risk assets right now is linked to the onset of new tariffs in the U.S. Bitcoin isn't a good that's imported, and it can't be created via fiat. It isn't a medium of exchange for trade payments to any significant degree. Tariffs on mining hardware will simply cause mining to be done elsewhere, so there is no threat to the network itself.

So there are no direct risks to its value either in the near term or the long term. Therefore, as long as the coin has a handful of evangelists who are willing to buy it at any price, as I am, there will continue to be a persistent level of demand, which, when considering its supply dynamics, probably will slowly drive up prices over the long run.

Knowing the points above, and knowing that my time horizon for Bitcoin is to hold it for 20 or 30 years, there simply is not much of a reason to stop my regularly scheduled purchases. Bitcoin isn't going to get any easier to make, and in the big scheme of things, major holders are going to keep accumulating it to take supply off the market. The price today is a distraction.

Altcoin investments are on pause, not cancelled

As bullish as I may be on Bitcoin, the same is not true of altcoins at the moment, including those that I've held dear like Solana. There's no need to rush to sell, and there's no need to stop investing in them altogether, but more caution is now warranted compared to just a few weeks ago.

In short, the largest altcoins in the cryptocurrency sector are not necessarily very insulated from economic downturns at all. It's a no-brainer that they're riskier than Bitcoin because they're smaller and less established overall. But it's in times of turbulence that additional risk exposure can cause real problems for investors, and potentially problems that won't blow over once economic conditions improve.

It isn't that the core investment theses of the top altcoins are suddenly invalid, or that I'm selling them as a result of economic instability or tariffs. It's that their recovery is not at all guaranteed because many of them rely on the quality of the (typically highly risky) projects their blockchain ecosystems to continue to attract new capital to invest.

When investment dollars allocated to high-risk plays start to run short due to investors losing their nerve in perilous times, those ecosystems start to shrink. For them to recover, new projects, most likely in newly emerging growth segments, need to launch and find traction -- and that's something that is a lot harder to do in a shaky economic environment.

I'm still a buyer of certain altcoins these days, and you could be too. But when it comes to picking between altcoins and Bitcoin, for now, it makes more sense to lean toward the somewhat safer and longer-term play, as a lot needs to go right for the riskier options to deliver, and the environment might not be right for that to happen for a while.

Should you invest $1,000 in Bitcoin right now?

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Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Alex Carchidi has positions in Bitcoin and Solana. The Motley Fool has positions in and recommends Bitcoin and Solana. The Motley Fool has a disclosure policy.