- Bitcoin (BTC-USD) – Historically demonstrated ability to bounce back from crashes.
- Binance (BNB-USD) – Backs largest exchange, and growing use cases strengthen price.
- Ethereum (ETH-USD) – High user base will keep ETH relevant for a long time.
- Ripple (XRP-USD) – ISO 20022 compliance makes widespread bank adoption likely.
- Stellar (XLM-USD) – Institutional use case strengthens longevity.
- USD Coin (USDC-USD) – Stablecoins resist volatility, and USDC is one of the best.
- Maker (MKR-USD) – Solid price floor, and DAO use cases continue to grow.
The cryptocurrency market is in obvious disarray today. Most of the top players are suffering losses, and the most unlucky of assets are seeing their values lopped in half. Indeed, the digital currency market is being spooked by recent events like regulation chatter and Federal Reserve tapering and rate hikes. Plus, there’s plenty of volatility spreading worldwide as a result of the Russian invasion of Ukraine and the various consequences of such a conflict.
However, there’s evidence that crypto investors aren’t going anywhere; rather, it appears they are doubling down and buying in the wake of the volatility. In fact, top exchanges are seeing volume increases of over 100%, with some seeing volume triple. The trick to investing now is in finding crisis-proof cryptos that can recover from situations like today’s with ease.
Crisis-Proof Cryptos: Bitcoin
Bitcoin is one of the best crisis-proof cryptos, because it has seen it all. The currency started the crypto trend, meaning it has suffered from nearly every bit of volatility that has ever hit the industry.
Historically, Bitcoin has shown its ability to bounce back. The 2018 cryptocurrency crash saw BTC prices tumble by over 75%, taking the coin from over $19,000 to under $4,000. Of course, we know that Bitcoin recovered from that crash; its massive run-up in late 2020 and early 2021 brought it to an all-time high over $60,000.
Last summer’s crash dragged the coin from these highs back down to about $30,000. It showed better resistance to this volatility, losing only 50% of its value and climbing back up more quickly.
And, amid another downturn, Bitcoin is flexing its strength once more. After finding its price bottom at around $37,000, BTC prices soared $12,000 in just 10 days. Of course, keeping in mind its aptitude for bouncing back, one should expect Bitcoin to shake off bearishness with ease.
Crisis-Proof Cryptos: Binance
Binance operates the world’s largest crypto exchange, effectively making it the New York Stock Exchange of digital currency. It also operates one of the fastest-growing blockchain networks in its BNB Chain.
The Binance exchange is easily the most popular crypto trading floor. Today, the platform sees $13 billion in assets trading hands around the globe. The closest exchange by size is Coinbase (NASDAQ:COIN), which processes only $3 billion in assets today.
This gives the platform a huge role in influencing the relationship between the crypto industry and a public that still has a lot to learn about digital assets. Its founder, Changpeng Zhao, frequently appears on mainstream media outlets to talk about the industry. This continues to elevate the crypto’s profile and vastly boosts its fundamental strength.
Crisis-Proof Cryptos: Ethereum
Ethereum remains one of the most crisis-proof cryptos because — like Binance — the network is so fundamentally sound.
The Ethereum network hosts a massive share of the entire dapp space, with over 4,000 decentralized applications on its platform. And each month, it adds dozens of new applications to the network. The volume of active users on Ethereum continues to trend upward as well. Since 2017, Ethereum has seen its monthly active users soar from about 30,000 to over 500,000.
Thanks to its influence and long history (relative to the teenage existence of cryptocurrency), it will be quite difficult for any layer-1 competitors to unseat Ethereum. After all, it brought smart contracts to the mainstream, helping to accelerate innovation in the blockchain space. Meanwhile, Ethereum continues to innovate, preparing for its Merge upgrade. As this upgrade takes shape in the summer, it will become even more streamlined and user-friendly, helping to boost its popularity even further.
Crisis-Proof Cryptos: Ripple
The Ripple network is arguably more crisis-proof than any other crypto on this list. After all, no others have been embroiled in the long legal battle that Ripple is engaged in with the U.S. Securities and Exchange Commission (SEC). And still, XRP is able to remain one of the largest cryptocurrencies in the world.
Another factor at play is the currency’s ISO 20022 compliance. By retaining this compliance, Ripple is setting itself up to be a commonly used currency worldwide by institutions.
ISO 20022 is an international bank messaging standard, created to make international wire transfers faster and cheaper. The standard has a lot of support worldwide, and even the U.S. is planning on instituting ISO 20022.
Ripple is already a popular currency for wire transfers across borders. In going by the book, Ripple is winning the favor of banking institutions. This will help it secure its place as an integral tool of institutional banking in the future, making it crisis-proof.
Crisis-Proof Cryptos: Stellar
Stellar is one of the best crisis-proof cryptos because it combines the long histories of Ethereum and Bitcoin with the institutional applications of Ripple. Founded in 2014, Stellar is one of the oldest cryptocurrencies still in use today.
What attracts investors to Stellar is its ability to help financial institutions and individuals store and move money in the cheapest ways possible. Like Ripple, Stellar has become a popular method of transacting money across borders without the red tape of transfer fees and waiting for settlement.
Stellar is the largest competitor of Ripple, and with a price of just a few cents per coin, it’s a very cheap crypto to place a bet on. While Ripple has been stuck fighting against the SEC, Stellar has been able to close the gap between itself and its biggest rival. Through partnerships with the likes of IBM (NYSE:IBM), Stellar is becoming an attractive alternative to XRP for international banking.
Crisis-Proof Cryptos: USD Coin
If you’re looking for crisis-proof cryptos, stablecoins are a no-brainer. This class of digital money is pegged to the value of a fiat currency — most often $1 USD — ensuring that prices don’t ever go down. And while they don’t go up either, they allow one to do things with their money that they can’t do with fiat.
The DeFi industry has become an attractive alternative to traditional banking, and it’s supported largely by the use of stablecoins. On DeFi platforms, one can loan out assets for rewards or stake their assets in smart contracts for yields. Often, the returns on these functions are far larger than anything afforded by a bank. As such, there’s little doubt that this industry will stick around, regardless of crypto market volatility.
USD Coin is a great choice to begin utilizing DeFi platforms. It is one of the largest stablecoin projects in the world, with a market cap of nearly $51 billion. There are plenty of places where one can stake their USDC, and they come with some mind-blowing returns. Voyager Digital, for example, offers a 9% yield on USDC staking. This is much larger than the fraction of a percent one might yield in a savings account.
Crisis-Proof Cryptos: Maker
Maker is an interesting play because it combines stablecoins with a blockchain phenomena that’s becoming popular very quickly: decentralized autonomous organizations (DAOs).
DAOs are organizations that allow a community to rule over its platform in a purely democratic way. Under a DAO, voting power is allotted by the size of one’s holding. As long as one holds a certain amount of a project’s underlying currency, they can vote on network proposals and upgrades.
Maker is a DAO that supports the Dai (DAI-USD) stablecoin network. MKR crypto holders are all members of the Maker DAO. They can use their voting power to decide on any proposed upgrades or changes to the Dai ecosystem. DAOs are growing quickly in popularity, and Dai is one of the biggest stablecoin networks on the crypto market. As such, MKR is likely to be one of the most successful DAO projects in the future.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.