Nolan Bauerle, director of research at CoinDesk, says that 90% of current cryptocurrencies will not survive a drop in markets. Those who survive will dominate the game and increase profits for early investors. Like all cryptocurrencies, Ethereum remains speculative. There's a chance you won't survive in the long run, so if you decide to buy, make sure you only invest money that you can comfortably afford to lose.
No one can confidently identify which cryptos will survive market crashes. bitcoin has managed to stay afloat in all bear markets and has recovered quickly when things turned bullish and is considered a de facto safe haven with no space if we count stablecoins. The bad news is that you can't avoid volatility in the cryptocurrency market, but the good news is that you can structure your cryptocurrency portfolio with the goal of selecting cryptos that can survive the bear market. Naturally, when transaction values are consistently high, it means that cryptocurrency is in constant circulation, which corresponds to high liquidity, implying that price discovery is efficient.
If you stretch your budget, or borrow money, to buy a cryptocurrency and the market falls, you may find yourself unable to cover daily costs, such as food or accommodation costs. There are hundreds of platforms around the world that are waiting to give you access to thousands of cryptocurrencies. For those HODLing cryptocurrencies, this is a headache that most wish they could avoid, as which cryptos will survive a bear market becomes more difficult to say. A major factor is increased regulation, which could have a significant impact on cryptocurrency prices in the short term.
Like the economy, the cryptocurrency market is cyclical and it's no secret that it's prone to severe, unexpected, and often unprecedented volatility. Similarly, gold-backed cryptocurrencies often have a trusted central entity behind them, creating a single point of failure. However, if you're willing to take more risks because of the potential for substantial rewards over time, it could be the right cryptocurrency for you. Crypto asset returns have, for the past decade, been well above those of stock markets, with Bitcoin greatly outperforming both gold and the S%26P 500 over the past 10 years.
Ethereum is already a major player in the crypto space, but it could grow even stronger in the coming months and years. In an industry as new and untested as cryptocurrency, it doesn't take much to generate big changes in price. When selecting cryptocurrencies that will survive a bear market, it is best to consider choosing cryptocurrencies from some asset classes and their financial metrics, such as market capitalization, liquidity, circulating supply, and traded volume. Note that any cryptocurrency's blockchain metrics, such as hash rate, number of active addresses, and transaction values and fees, can be accessed from various websites and are also available on CryptoCompare's advanced charts.
Most people treat cryptocurrencies as speculative assets, but they don't realize that these currencies are tied to real projects, blockchain projects aimed at solving a real-world problem.