The Blue Chips of Crypto

If you are reading this article, you are likely very interested in cryptocurrency. Perhaps you view it as your one chance to finally change your life financially and get ahead in life. Maybe you view it as an insurance hedge against the potential hyperinflation of fiat currencies. Or maybe you view it as an asset that will change everything, and actually make the world a better place.

If you have been in the cryptocurrency market for a significant amount of time, it is likely that you have thought about each of those possible outcomes hundreds of times. But a funny thing happens the longer you are in this market. You begin to become accustomed to the risk of cryptocurrency. So much so that you begin to not even see it anymore. You have fallen so far down the cryptocurrency rabbit hole, that the only possible outcome you can see is that crypto will go mainstream. Causing each of us to become rich in the process.

That is an outcome that we would all be thrilled with, and is likely why many of us first joined this market. However, the truth is that crypto remains the most volatile financial asset in existence.

Just over twelve years ago Bitcoin actually had no value. Since then its price went all the way up to $69,000, and now currently sits at $17,000. This incredible volatility is what gives us the opportunity to obtain riches in this market. But it also could cause us to lose everything. Altcoins are even more volatile than Bitcoin.

The longer that you are in crypto and the larger your portfolio grows, you begin to become numb to the gains and losses of your portfolio. You're HODLing for the long term and those gains or losses are just numbers on a computer screen. After a while, you may not even feel joy when prices increase, but instead, feel relief.

One of the most important things to be successful in the cryptocurrency market is to never forget how risky these assets are. Even Bitcoin, which is considered the safest and most conservative asset in crypto, is still incredibly volatile. Since March 2020, BTC went from $3,800 to $64,000. Then back down to $28k, up to $69k, and now back down to $21k. This would be enough to give asset holders in traditional financial markets a heart attack.

Altcoins take it up a notch and are like Bitcoin on steroids. For example, during the covid March crash of 2020, Cardano was at $0.028 and would go all the way up to $3.10 and now back to $0.25. Solana has a similar story, starting from under $3 and going over $260, and now being back to $12.

But that is not even the worst of it. There are countless projects that end up going to zero. An example of this was Terra Luna, which was one of the most hyped projects in the market. It had quickly rocketed up to a value of over $115 and then the peg between Luna and its stablecoin UST became depegged. Resulting in both of them nearly going to zero and tens of billions of dollars being lost in the process. There are countless other stories similar to this. Projects that were created just to make the creator rich are named pump and dumps. There are also hacks that cause projects to go to the wayside as well. The only guarantee in crypto is that you are in the Wild West and that danger is lurking all around you. The cryptocurrency market is so young that we don’t even know what this market will transform into yet. With there already being more than 20,000 cryptocurrencies on the market. It’s likely that there are only about 100–200 “real” projects in the market. Of those 200 projects, I would argue less than 10 will be around for the long term. (More than 20 years)

The gains you have in those speculative altcoins likely will be lost over time and there are many projects in the market that have no use-case that are greatly over-valued and will be considered trash.

This is why many people in the crypto market recommend just sticking to investing in the blue chips of crypto. Currently, there are only two blue chips in the crypto market and they are Bitcoin and Ethereum. With Bitcoin being the safest and most likely to succeed. All of the rest are much riskier to invest in. In fact, investing in other of the riskier crypto assets is more like gambling with very low odds of success.

We all worked extremely hard to earn the money that we have and are lucky to have some leftover to be able to invest. We should be putting just as much effort and care into our investing as we put into initially earning that money. If Bitcoin and Ethereum fulfill their potential, they still could go up by 100x or more. While the further down on the market cap list of cryptos you explore, the less likely you will have success. Currently, all prices in the crypto market are tied to what Bitcoin and Ethereum are doing. If they go up, most altcoins prices’ will go up too. However, that won’t be the case forever. When that day comes, there will be a huge reckoning in the altcoin market. Invest wisely.

How about you? What do you think the blue chips of crypto are?

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