Cryptocurrencies have acquired a prominent spot in people’s financial portfolios. Feels like cryptocurrencies arrived and suddenly became a part of everyone’s life. Digital assets have emerged as a reliable money-making method for the masses.
Despite all the glamour cryptocurrencies carry, we cannot overlook the risk associated with them. In the dip of 2021, investors lost a significant amount of money. Prevalent cryptocurrencies lost almost half of their market value, and as an investor, you would never want to get caught in the middle.
Cryptocurrencies are the most favored way to earn money for millennials. But we cannot ignore the fact that a market crash can ‘also’ hurt your portfolio significantly. And because of the risk involved with digital assets, it only makes sense to tread carefully with your investments.
Be it stock markets or crypto markets, there’s always a certain amount of risk of an unpredicted crash. But crypto markets gain the limelight due to their decentralized operations and huge fluctuations. As a smart investor, you can pull remarkable profits from the market, while examining a few points related to the market crash. So, let’s find out the potential of crypto markets to survive a crash.
Can cryptos and digital assets survive a crash?
Cryptocurrencies have been introduced as promising digital assets. Whether it is stock markets or crypto markets, it is bound to fluctuate. Sometimes fluctuations can be unsettling to you as an investor.
But the point is can cryptocurrencies survive the upcoming crash? then it can be a subjective matter. But in our opinion, it has the maximum potential to stand strong in a crash.
In the previous crypto crash, numerous crypto companies went bankrupt. But numerous companies also stood still amidst the crash. At present, crypto markets value at around $1.7 trillion, and the number is enough to state the strength cryptocurrencies possess.
Based on several surveys done among new-age investors, 90% of them prefer cryptocurrencies as their investment options. The figure provides certainty about the strong foundation of crypto markets.
Regardless of the crash, crypto markets are standing strong and witnessing growth at a rapid rate. The number of crypto traders is anticipated to surpass 33 million by the end of 2022.
No doubt! Cryptocurrencies are here to stay with us as a promising tool for earning money. But it has to be done by understanding a few helpful tools like risk reward ratio and how to effectively use stop loss in trades.
Now that we have figured out the strong foundation of cryptocurrencies. Let’s discuss some strong cryptos that will survive the crash.
Cryptocurrencies that can survive a crash
Though there are cryptocurrencies that plunged in the crash, there are cryptos that have shown signs of strength and reliability as well. You can keep a check on a few points to assess the potential of cryptocurrencies during a crash.
To analyze the potential of a cryptocurrency, experts suggest:
- Analyze the website of the crypto project
- Find the prevalent investors backing the project
- Go through the white paper of the asset
- Learn about the community that is behind the project
- Understand the trading volume
- Take a look at the history of the coin
- Identify good projects against pump and dumps
By analyzing these metrics you can get an idea about the strength of a cryptocurrency.
However, by examining a crypto project through the metrics, you can maximize your chances of getting positive results. But we have sorted out a few cryptocurrencies that show the maximum potential to survive a crash. So, let’s find out the crypt that will survive a market crash.
Bitcoin lost around 55% percent of the market value in the previous dip but emerged strongly by marking an all-time high. The veteran in the crypto fraternity Bitcoin got introduced in 2009 and since then it has touched new all-time high records.
In the crypto league Bitcoin looks residing at a promising position. The admirers of Bitcoin will keep it intact in the crypto markets, hence, giving it a promising background. The masses backing Bitcoin exclaim about the strength and immortality of Bitcoin.
Financial institutions and governments are considering Bitcoin to be added to the Balance sheet. The move from governments shows a promising sign for the sustainability of Bitcoin.
Litecoin is a rigid and reliable cryptocurrency at present. The technology backing Litecoin ensures its strength and durability. It possesses the strong mind of a former Google engineer on its path.
It acquires the source code of Bitcoin. So, Litecoin also works on a global payment network without the intervention of a centralized organization.
If you follow crypto markets then you might be wondering how Dogecoin grants a place in this discussion of which cryptos will survive. Dogecoin was introduced as a meme coin, but the fun part is that it surpasses many serious cryptocurrencies in terms of market capitalization.
Billionaire Elon Musk’s tweet skyrocketed Dogecoin’s price and since then it’s trading with strength in the crypto markets. Musk went a step ahead and declared to accept Dogecoin as a mode of payment at Tesla Inc. This move by Musk gave investors a positive sign about the future of Dogecoin.
Cryptocurrencies operate on a decentralized network and it solely depends upon how the investors approach a cryptocurrency. Elon Musk’s soft corner for Dogecoin gives it the required support to sustain in unpredicted crypto markets.
Being merged recently, Ethereum stands strong amongst other cryptocurrencies. It works on a blockchain network where several other tokens and decentralized apps work too. The network backing Ethereum has a strong foundation that will certainly hold it during a crash.
Ethereum has a good reputation among investors, since its launch, it has given remarkable profits to its holders. Ethereum is the cryptocurrency that is preferred by most first-timers. In the past market dip, Ethereum was trading substantially compared to other cryptocurrencies.
Crypto experts have anticipated Ethereum to be emerging as one of the most reliable cryptocurrencies and in the coming years, it has the potential to mark new trading records.
5. Binance Coin
Binance Coin was created by the popular cryptocurrency exchange Binance. When a strong authority is backing a cryptocurrency we can interpret its survival in the market crash.
By strong authority we mean, Binance is the largest crypto exchange in the world with the highest trade volumes. Binance would have every necessary tool to hold onto Binance Coin in a market crash.
Binance Coin is further used for settling transaction fees, travel expenditures, rewards, and much more. The use of Binance coin and the simultaneous growth of the crypto industry ensures its positive future.
No doubt cryptocurrencies are termed as a reliable tool to extract money from the markets. But a wise investor understands the nature of the market and always stays prepared for the unpredicted movement of markets.
In the previous market crash, a few cryptocurrencies went extinct, while a few stood strong in that storm. While deciding to invest in cryptocurrencies, do your research and technical analysis, and post that decide on the cryptocurrency to invest in.
Consider the cryptocurrencies mentioned above but as we say, crypto markets are volatile and can go against our anticipation. So, always study the nature of crypto markets and make wise decisions.
It’s always fun to learn about new money-making methods right? And your fun gets doubled up when you utilize your learnings to generate money. In the same way, crypto markets can be fun and reliable, if done in the right way. Talking about right ways, it’s important to stay updated with your crypto taxes as well. And what better way than to start right here at KoinX and gather all your tax reports at a single place.