Crypto Market Sell-Off: 1 High-Conviction Cryptocurrency to Buy and 1 to Avoid

2026 hasn't been kind to cryptocurrency investors so far. Most of the top tokens declined as investors fretted over elevated interest rates, challenging macroeconomic headwinds, and competition from traditional commodities like gold and silver.

However, instead of shunning the entire crypto industry, investors should probably just be more selective with the coins they buy. It's still smart to buy blue chip leaders like Bitcoin (CRYPTO: BTC), but it also might be better to avoid altcoins like Shiba Inu (CRYPTO: SHIB).

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The token to buy: Bitcoin

Bitcoin's price has declined about 30% over the past 12 months, but it's still the world's most valuable cryptocurrency with a market cap of $1.4 trillion. It's also still up more than 70% over the past five years, even after weathering a frigid crypto winter in 2022 and 2023.

Bitcoin experienced wild price swings during that period, plummeting from about $68,000 in November 2021 to a multi-year low of about $16,000 in November 2022. Yet it recovered from that swoon as several catalysts kicked in.

Declining interest rates drove investors back toward Bitcoin and other riskier assets, the Securities and Exchange Commission (SEC) finally approved its first spot price exchange-traded funds (ETFs), and the token underwent its latest halving -- which halves its mining rewards every 4 years -- in 2024. More institutional investors accumulated Bitcoin as a hedge against inflation, and more companies and countries established "Bitcoin Treasuries".

Bitcoin will remain volatile in this choppy market, but it has clear advantages against other cryptocurrencies. It's still actively mined with powerful computer chips, it has a supply cap of 21 million tokens, and nearly 20 million of those tokens have already been mined.

As we head toward Bitcoin's next halving in 2028, its scarcity could make it more comparable to gold or silver. If that happens, its price could stabilize and rise again as investors revalue it as a hedge against the monetary expansion of fiat currencies.

The token to avoid: Shiba Inu

Meanwhile, investors should avoid smaller meme coins like Shiba Inu, which shed nearly 60% of its value over the past 12 months. Shiba was created as a parody of Dogecoin (CRYPTO: DOGE), itself a parody of Bitcoin, in 2020. It's risen roughly 12,000 times since its market debut in 2020, but three issues could limit its upside potential over the next few years.

First, Shiba Inu can't be mined. Its creators minted its entire supply of one quadrillion tokens on Ethereum's (CRYPTO: ETH) blockchain. Nearly half of those tokens have been burned, but most were burned by Vitalik Buterin, the co-founder of Ethereum, who was gifted over 500 trillion SHIB tokens by Shiba Inu's development team in 2020.

Therefore, it's doubtful Shiba Inu will ever be valued by its scarcity in the same manner as Bitcoin. That makes it a weak hedge against the devaluation of fiat currencies.

Second, the SEC hasn't approved any spot price ETFs for Shiba Inu. T. Rowe Price filed an application for the first Shiba Inu ETF last November, but it's unclear if it will ever be approved. The lack of a spot price ETF will likely limit its appeal among institutional investors.

Lastly, Shiba Inu isn't as useful as Ethereum, which supports tens of thousands of developers across its Layer 1 (L1) blockchain and Layer 2 (L2) rollups. Shiba Inu offers its own L2 blockchain, Shibarium, to support the development of Ethereum-compatible applications at higher speeds, but it probably won't ever become a major developer platform.

Shiba Inu might attract some short-term traders, but I believe it will fizzle out within a few years. However, Bitcoin could still bounce back once its near-term headwinds dissipate.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.