In the stock market, blue chip is the definition of stocks issued by large institutions, which have existed sustainably despite many difficulties. Blue chip coin in the crypto market has the same meaning.
Table of contents
- What is Blue Chip Coin?
- Compare Blue Chip Coin and Stock Blue Chip
- What constitutes a blue chip coin?
- Why is BTC a blue chip coin?
- Why is ETH a blue chip coin?
- Downtrend - "golden" opportunity to invest in blue chip coin
Blue chip Coin is a famous cryptocurrency with high liquidity, low volatility and large daily trading volume.
The term "blue chip" is derived from the game of poker. In 19th-century America, the game of poker dominated the frontier landscape as red, white, and blue poker chips were regularly exchanged. Blue chips always hold the highest value.
The term was first used to describe stocks in the 1920s. According to reports, a Dow Jones employee coined the term after noticing some stocks were trading much higher than the average. other stocks.
Throughout the centuries, blue chips have been used to refer to more than just a high-priced stock. Today, it refers to shares issued by established, financially stable companies that have a solid reputation for weathering storms and withstanding the test of time.
When it comes to cryptocurrencies, the definition of blue chip remains the same. Coins like Bitcoin and Ethereum are the blue chip coins in the cryptocurrency and blockchain space.
Bitcoin is the first and famous cryptocurrency with the highest market price at the moment. Although when the market fell, BTC remained volatile, it has managed to increase in value continuously over time since its inception in 2008.
Ethereum has also grown amazingly in both prominence and value. As the pioneer of DeFi and the main platform for non-fungible tokens (NFTs), ETH's blue chip nature will endure well into the future.
Traditional blue chip stocks are often a component of reputable indexes, such as the Dow Jones Industrial Average, S&P 500, and NASDAQ in the United States. Although no definite benchmark exists for market capitalization, the generally accepted benchmark for blue chip stocks is a market capitalization of $5 billion.
Blue chip stocks lead the market, industry and sector. Some examples of companies with green chip status include Amazon, Google, Walmart, Disney, Coca-Cola, General Electric, and IBM. All are highly liquid, highly rated, highly reliable and most importantly highly stable. This makes them safe investments, especially during bear markets.
For the most part, the same is true for blue chip cryptocurrencies. More than 18,000 different cryptocurrencies have been minted and it seems that more and more are added every day. However, very few companies achieve a strong enough reputation or reach a market capitalization worthy of blue chip status.
While relatively new and haven't been around as long as some blue chip stocks, Bitcoin and Ethereum have stood out as blockchain pioneers and blue chip cryptocurrencies you can trust under almost any conditions. market.
Like their blue chip NFT counterparts, there are several factors that distinguish blue chips from the thousands of altcoin options currently available to less risk averse traders and investors. Some of these factors include:
Long term activity
First and foremost, blue chip cryptocurrencies are not entirely new. In fact, the opposite is more true. It has been around for more than a decade and has withstood many market conditions. As the original cryptocurrency of blockchain technology, Bitcoin has outlived any other cryptocurrency, helping it achieve blue chip status.
Founder's Reputation
In the traditional world of equities, the term “blue chip” is used to describe an established company that is globally recognized as a reliable investment. Blue chip companies have a strong reputation for creating quality products or services and weathering downturns. The same can be said for blue chip coins like Bitcoin and Ethereum, which have strong reputations within the investor community and around the world.
Concerns from large organizations
No other coin has as much institutional support as Bitcoin. While Ethereum and its DeFi platform is a blue chip cryptocurrency, Bitcoin is now part of corporate balance sheets, CME futures, ETFs, etc. Big companies like Tesla holds billions of dollars in Bitcoin alone.
Large market capitalization
Traditionally, a minimum market cap of $5 billion is required to earn crypto or blue chip stock status. As two of the biggest coins in the crypto world, Bitcoin and Ethereum blew that number away. With their current market capitalization of US$377 billion and US$131 billion respectively, they will certainly hit the milestone of becoming blue chips.
High liquidity
High liquidity and being able to easily move in and out of positions is another feature of blue chip coins and stocks. Billions of BTC are traded every day, so unless you want to buy or sell millions of coins, you will find the market always liquid whenever you need it.
Lower volatility
Cryptocurrencies and volatility go hand-in-hand. While wild price swings are a minor issue for avid traders, the swings can be brutal for HODLers. That said, some coins are more volatile than others. Although volatile, blue chip cryptocurrencies like Bitcoin and Ethereum don't move as much as other cryptocurrencies. This makes them safer, more stable investments in both bull and bear markets.
As the first cryptocurrency, laying the foundation for the development of the entire crypto market. Bitcoin has been around longer than any other cryptocurrency and definitely qualifies as a blue chip coin
Given its track record, it's no surprise that Bitcoin also has the largest market cap of any cryptocurrency. In fact, BTC is such a force in the crypto space that the price movements of other blue chip coins and non-blue chip coins alike often depend heavily on it.
Unlike other cryptocurrencies and blue chips, Bitcoin investors and traders enjoy a first-mover advantage. They also benefit from the scarcity of Bitcoin. With only 21 million BTC available, the price of BTC continues to rise and proves itself to be a solid blue chip crypto investment.
Ethereum (ETH) is the second largest cryptocurrency by market cap, but is the top in terms of usage, making it a strong player in the crypto space. Its revolutionary, powerful platform supports over 70% of all available Altcoins and has the largest number of decentralized applications (Dapps) built on it.
Overall, ETH accounts for 20% of the cryptocurrency market. However, it continues to improve and evolve, making it an ever more important component of the crypto space.
With its wide usage and cutting edge technology, Ethereum is undoubtedly one of the best blue chip coins to invest in most of the time. Especially in times of crisis when safety and security considerations far outweigh the desire for short-term profits.
The ups and downs of the market are inevitable in the development process. For skilled investors, downtrend or uptrend is not too big of a problem, because they have had similar experience in previous volatility.
For new and inexperienced investors, they can completely turn risks into opportunities when the price of bitcoin and other coins is currently plummeting. Because it is clear that in the field of investment, it is extremely necessary to keep a "cheap" price. If you buy a "cheap" price, you can sell it at a "good" price.
However, during the downtrend period, investors should learn about the coin well before choosing to buy to hoard. The reason why, let's take a look at the top 10 coins by market capitalization in June 2017 and June 2022 below:
- You can see that except for Bitcoin and Ethereum which still maintain the top 1 and top 2 positions after 5 years, the remaining positions have had a lot of volatility. Therefore, it is not enough just to choose coins to hoard, you also have to "choose to deposit gold" if you want to get a sustainable and safe profit when the market rises again (uptrend).
- Advice for investors is to focus on “blue-chip coins”. Although significantly more expensive than other coins, in a downtrend you can completely buy Bitcoin to accumulate because the price is falling. Currently BTC has more than halved from its all-time high - ATH, but the probability of Bitcoin returning to that level is higher than in other coins.
However, that is not to say that altcoins are not worth investing in. However, in the downtrend period, choosing to buy Bitcoin to gradually accumulate is a wiser and safer investment choice. Because if we have failed in the downtrend season, we will not be able to enjoy the fruit when the market is uptrend.
According toRemitano.com
