In this article, we discuss the 5 cryptocurrencies Redditors are buying before recession begins. If you want to read about some cryptocurrencies that Redditors are buying, go directly to 10 Cryptocurrencies Redditors are Buying Before Recession Begins.
5. Solana
Solana is one of the most popular altcoins on the market. Investors have backed the coin as one of the main challengers to Ethereum, the second most popular coin globally. This is because the Solana network has lower transaction speeds and lower fees compared to the Ethereum network. Utility and community have driven a rapid rally in the price of the coin that has become one of the most popular crypto on Reddit. Solana is available on stock trading application Robinhood as well. All these use cases contribute to the overall asset value.
Solana is also different from other coins since it uses a combination of proof-of-stake and proof-of-history mechanisms to achieve consensus. Since the Proof-of-Work (PoS) system is under fire for energy-intensive mining requirements, resulting in a subsequent risk associated with owning PoS coins, Solana is a much safer investment in this regard as well. Solana was launched in 2020 at a price of $0.77 per coin. In the two years since, this figure has climbed to around $136, representing an increase of 17,500%.
4. Binance Coin
Binance Coin is the coin used on Binance, one of the largest crypto exchanges in the world. During times of crisis, trades related to crypto usually increase as investors panic and sell. Since a large number of these transactions are made on the Binance platform, they require the use of the Binance coin for trades, resulting in an increase in demand for the coin that subsequently has an impact on the price. In addition, the coin is also used for other purposes like payments processing and travel arrangements.
Binance Coin is also one of the fastest-growing coins on the market. In 2017, one Binance coin was priced at around $0.10. By early April 2022, the price of one Binance coin had risen to around $445. This represents a gain of 445,000% in five years. Binance also has a global presence, meaning the exchange offers relative protection from reliance on just one or two markets. The trading fees on the platform are also one of the lowest globally, increasing the value it offers to crypto enthusiasts worldwide.
3. Tether
Tether is a stablecoin. This means that the price of the coin is tied to a third-party asset, in this case the United States dollar, and is less prone to the price volatility associated with other cryptocurrencies. In the past year, the price of Tether has not fluctuated by more than 1% or so, attesting to the stable nature of the asset in the wild crypto market. Tether is also one of the biggest coins in the world in terms of market capitalization, ranking third behind Bitcoin and Ethereum. It includes support for a number of blockchain networks.
There are also some potential downsides to investments in Tether that should be considered before backing it as a recession investment. Only about a third of the coin is backed by cash, fiduciary deposits, reverse repo notes, and government bonds. The rest of the coin is backed by a short-term money market instrument called a “commercial paper”. According to a report by crypto expert Ann on Medium, Tether has not engaged with reputable firms for commercial paper transactions, increasing overall risk.
2. Ethereum
Ethereum is the largest decentralized application platform in the world and offers more growth potential than Bitcoin, the most popular coin by market capitalization, for investors. This is because Ethereum is on the verge of rolling out a big update that will significantly improve the energy efficiency and speed of the network. As market experts are predicting that the US economy might drop into recession later this year, buying Ethereum at a bargain price now could translate to significant returns in the coming months.
Ethereum already hosts nearly 3,000 decentralized apps on the network. However, the network can only process nearly 100 transactions per second, resulting in constant bottlenecks. The new upgrade, transitioning from Proof-of-Work to Proof-of-Stake, will likely increase this number to 100,000. The price of Ethereum is also more predictable than Bitcoin since it is tied to real-world use cases. This makes the coin more akin to gold and oil, which are also used to store wealth during crises, than other crypto coins.
1. Bitcoin
Bitcoin is widely regarded as one of the best-performing assets of the last decade. Many investors are turning towards Bitcoin as an alternative to cash or high-quality dividend stocks during times of recession. This is because the value of the coin is not tied to the economy of one particular nation, relatively protecting it from the ripple effect of a market crash in the US or China. The price of the coin is not tied to one particular event either, rather it revolves around different themes such as regulation, environmental concerns, government crackdowns on mining, and changes in institutional adoption.
Bitcoin is also being used to store wealth since it tends to perform well during economic expansions and contractions. For example, Bitcoin is a safer option as a store of value compared to other popular coins like Ethereum and Tether because the purpose of the coin is not centered around practical use-cases like smart contracts, block times, and non-fungible tokens. Another advantage of an investment in Bitcoin during a crisis is that the total supply of the coin is capped and added supply is decreasing.
You can also take a peek at 10 Stocks Reddit’s WallStreetBets is Buying in July 2021 and Top Robinhood Stocks Popular on Reddit.
