The crypto market has had momentum all year, but that seems to be coming to an end as April comes to a close. The entire market has dropped, but the biggest names are leading the way.

Bitcoin (CRYPTO: BTC) has fallen 4.7% since the stock market's close on Monday, Ethereum (CRYPTO: ETH) is down 6.5%, and Dogecoin (CRYPTO: DOGE) is off 6.1%. And this continues a bad week with the tokens down 9.7%, 8.1%, and 18.2% over the past seven days.

Crypto ETFs have hit saturation

When Bitcoin exchange-traded funds (ETFs) hit the market in the U.S., they brought billions of dollars in new investment to the industry, and Bitcoin jumped and pulled the entire market with it. But that didn't happen in Hong Kong.

Bitcoin and Ethereum ETFs were introduced in Hong Kong yesterday, and there was only $8.5 million in Bitcoin ETF trading and $2.5 billion in Ethereum ETF trading on opening day. That could indicate the appetite for crypto ETFs is fading.

Binance founder's fate

The other cloud hanging over crypto is the sentencing of Binance founder Changpeng "CZ" Zhao in Seattle. He pleaded guilty to one count of violating the Bank Secrecy Act in November, but prosecutors have asked for a three-year sentence.

It's not clear what will happen to CZ, but like what happened with previous court cases and charges, the crypto industry has had to fight for both regulatory clarity and against fraud in the industry. Investors were reminded of that today.

The momentum trade may be over

More worrying for crypto investors is that the rally's driver over the past six months has now faded. Investors have been in a "risk on" mindset since mid-2023 and are now facing a slowing economy and the reality of higher interest rates for longer than previously expected.

Crypto was supposed to be a hedge to some of these economic woes and offset the inflation brought on by money printing. Still, the reality is that crypto trades correlated with higher-risk assets like growth stocks. And many growth stocks are falling if earnings miss expectations by even a tiny amount.

Unless there's a turnaround in the growth rate of the economy or the appetite for risk from investors, we may have seen a top in crypto values for a while.

How crypto can get its mojo back

Where I'm looking for growth in the next year is the utility crypto can bring to the financial market. Companies are beginning to test or use crypto and the blockchain for applications like financial payments and the issuance of bonds, which are just scratching the surface of potential use cases. But the market value is still driven more by hype and speculation than real utility.

I think tokens that add utility will be the best place for long-term investments, and that may mean meme coins like Dogecoin and tokens like Bitcoin that are expensive to use to transfer funds get left in the dust. The blockchain is coming, but not all tokens will have value when it does.

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

Before you buy stock in Bitcoin, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $537,692!*

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*.

See the 10 stocks »

*Stock Advisor returns as of April 30, 2024

Travis Hoium has positions in Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

Why Bitcoin, Ethereum, and Dogecoin Plunged Today was originally published by The Motley Fool