There are some real fears surrounding a stock market crash in America. Wall Street analysts and stock-trading celebrities are increasingly becoming bearish. Michael Burry, who predicted the 2008 stock market crash, is among those sounding off about speculation, inflation and a host of other potential crash indicators. For investors now worrying about a market downturn, though, there is a place of refuge that didn’t previously exist. Could cryptocurrency be a hedge against a crash? Some say yes. If you’re an investor that believes DeFi could be the remedy to Wall Street’s illness, you are probably seeking out cryptos to buy right now.
But where is money best spent in this market? There are so many different subcategories within crypto — layer-1 and layer-2 protocols, Web 3.0 players, pupcoins, the list goes on. What’s most essential right now, especially for more risk-averse investors, is that a project has a solid foundation. If you’re hedging against stocks and anticipating a crash, you don’t want to throw your money into some token promising tenfold returns without a substantive roadmap.
In other words, to hedge against market volatility, stick with what works. Here are some cryptos to buy if you’re anticipating a market downturn in 2022:
- TerraUSD (UST-USD)
- Ethereum (ETH-USD)
- Polygon (MATIC-USD)
- Avalanche (AVAX-USD)
- Solana (SOL-USD)
- Bitcoin (BTC-USD)
- Chainlink (LINK-USD)
Cryptos to Buy: TerraUSD (UST-USD)
One of the best ways to hedge against a crash is through stablecoins. Why? They unlock more possibilities for your money in ways fiat currencies simply can’t. And among stablecoins, TerraUSD’s UST is one of the best.
UST is a powerful asset due to the fact that unlike other stablecoins, it doesn’t rely on a reserve of fiat currencies to ensure its price stability. Rather, the value of UST is locked at $1 U.S. dollar through the fluid exchange between it and the Terra (LUNA-USD) coin. The process UST uses to keep its $1 peg is simple supply and demand economics. The network ties the supply of UST to the supply of LUNA. If the price of UST exceeds $1, investors can burn LUNA to increase UST supply, thus lowering its price. If it is below $1, UST can be burned to mint LUNA. The effect is twofold: UST is kept at its $1 peg, whilst LUNA holdings go up in value.
While this in and of itself allows investors to generate passive income with UST, the stablecoin also comes with the inherent perks of being a crucial DeFi tool.
See, stablecoins are a must-have for any investor looking to buy crypto on a decentralized exchange (DEX), since DEXs don’t permit fiat transactions. Moreover, the asset class is used often on DeFi applications. The Terra network has a slew of different DeFi staking pools and lending applications which one can leverage with UST for profit. One of the most popular of these applications is Anchor Protocol. One of the most well-known staking applications, Anchor has become popular for reliably offering an annual percentage yield (APY) of about 20% at any given time.
The Ethereum Virtual Machine is a software platform that’s far more crucial to the crypto industry than Ethereum bears would like to admit. Essentially, EVM is a runtime environment for smart contracts; this just means it is the machine through which smart contracts are executed.
Developers can use EVM to create DApps, conduct initial coin offerings (ICOs) and mint non-fungible tokens (NFTs). One of the huge bonuses of developing blockchain products using EVM is that they are Ethereum compatible. EVM is one of the simplest ways through which one can create a project; this makes it favored by both seasoned developers and new coders alike.
Importantly, you can also create an entirely separate network using EVM. In fact, many of the biggest networks competing with Ethereum are built using EVM, including Binance (BNB-USD) Smart Chain and Solana. This demonstrates the longevity of the Ethereum network.
Much of the blockchain world depends on Ethereum’s technology, and it is ensuring its future through continuing to innovate.
Cryptos to Buy: Polygon (MATIC-USD)
Like Ethereum, Polygon is a crypto to buy under any circumstances. The two networks exist symbiotically, with Polygon providing some of the most crucial scaling for the Ethereum network. As such, MATIC is one of the best cryptos to buy ahead of any sort of stock market crash.
Ethereum handles many transactions per day. In the fourth quarter of 2021, the network saw an average of 1.25 million transactions in a given 24-hour period. But, with the network only able to handle about 15 transactions per second, that number tops out there. That creates limits, especially when you consider the fact that Ethereum sees anywhere from a 500,000 to 700,000 daily users, and many of these users make multiple transactions per day.
Polygon is the solution to this problem, presenting investors with a fast and cheap way to transact off the Ethereum chain. As a layer-2 network, users can take their transactions from Ethereum to Polygon, which is capable of 10,000 transactions per second.
MATIC is a fundamentally solid investment in the future of blockchain. With Ethereum leading the way in terms of how people actually utilize the blockchain, it needs to be able to handle many times more transactions than it can currently. And when you consider the fact that blockchain is still in its infancy, and networks will see many times more users in a given day, then Polygon is a desperately needed service. Even as Ethereum prepares its Merge upgrade, which will vastly increase the network’s own scaling capabilities, there will always be a place for Polygon.
Source: Hakan GERMAN / Shutterstock
Even with all of this talk of Ethereum and its huge number of active users, there’s still a real possibility that the network isn’t even the king of layer-1 protocols years down the line. There’s always a chance that another network can surpass Ethereum.
Avalanche is a network that seems like an apt candidate to do just that.
Avalanche isn’t old at all; the network launched in September 2020. This makes it one of the youngest among layer-1 protocols. Don’t mistake that for weakness, though. The network is easily one of the fastest-growing, and one of those which poses the greatest threat to Ethereum’s dominance. The coin took only months to begin soaring above its $4 launch price. Then, in August 2021, it took off on a run from $16 to $134, a gain of nearly 740% in three months.
Beyond price blossoms, though, Avalanche is fundamentally strong because it is rapidly accumulating users and holding onto them. This is in large part due to Avalanche’s ability to process up to 4,500 transactions per second.
Users are noting this scalability, and in 2022 they have been fleeing the Ethereum chain in favor of Avalanche. In fact, hundreds of millions of dollars in assets are migrating from Ethereum to Avalanche each week. The AVAX crypto is now one of the largest in the world, boasting a $21 billion market cap.
In 2022, don’t expect it to ease off the gas pedal.
Cryptos to Buy: Solana (SOL-USD)
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Avalanche isn’t the only network posing a threat to Ethereum’s dominance. Solana, nearly at the same time as Avalanche, is beginning to rapidly accumulate new users and new capital. It presents a serious case as one of the big layer-1 leaders of the near future.
The fall of 2021 was a huge moment for the crypto market as a whole. But while Avalanche is one of the fastest-growing networks since then, only Solana has kept up with its incredible pace. The coin burst into the top-10 largest in the world. As Bitcoin and Ethereum prices gained in October, Solana outperformed the two by over 40%. Since then, it has remained among the largest products on the market
Solana sets itself apart from the other layer-1 projects dominating the market right now through jaw-dropping scalability. The network boasts the ability to process 65,000 transactions per second, which far outperforms even Avalanche.
And with the NFT market showing no signs of slowing down, Solana is a network which is benefitting. The network is becoming the go-to for NFT investors who no longer want to put up with the high fees and slow processing of Ethereum. While Ethereum held over 90% of NFT market share last year, Solana is stealing much of this dominance. As of January, Ethereum’s market share is down 15%, and much of that is going to Solana. Nearly six million NFTs have been minted on the network thus far.
Source: FabrikaSimf / Shutterstock.com
Yes, of course, Bitcoin is one of the best cryptos to buy for protection during a stock market crash. The king crypto may not always be the best currency if you’re looking for utility, but it’s arguably the best store of value in the asset class.
Bitcoin isn’t called digital gold for nothing; it has built its reputation over the years as one of the best investments to make. Back in November, 10 Bitcoin would’ve traded for almost $700,000.
Regardless of the coin’s recent losses, the currency has overwhelming institutional support. Investment banks far and wide are bullish on the future of crypto, and Bitcoin in particular. Bank of America calls the market “too big to ignore.” The bank is flanked by the likes of JPMorgan Chase and Goldman Sachs, who both have huge investments in the space.
Now, institutions are claiming Bitcoin is one of the best hedges for 2022’s incoming volatility. Just this week, crypto venture capital firm Pantera Capital called Bitcoin one of the best places to escape market fallout from the several planned Federal Reserve interest rate hikes.
Cryptos to Buy: Chainlink (LINK-USD)
Source: Stanslavs / Shutterstock.com
While much of this list consists of safer cryptos with huge market caps and huge active user bases, Chainlink is here for a different reason. Sure, it’s one of the largest cryptos by size, and it has its fair share of partners using its services. But, what makes Chainlink a really great buy in 2022 is its place in the future of Web 3.0.
Indeed, Web 3.0 has been an unavoidable buzzword in recent months. In short, this next wave of the internet would see end users controlling everything from their data, the rules and changes that come to platforms, and even the servers through which everything runs. Bulls are predicting Web 3.0 is coming much sooner than people were expecting. In fact, 2022 is being lauded as the year where Web 3.0 takes over, and users take power back.
Chainlink will be a huge component of this revolution. It is a decentralized oracle network, which supplies real-time data to blockchain projects all over the world. It can fetch price data for exchanges, it can underlie transactions, it can even provide news, as it happens, to platforms. Best of all, it can do this seamlessly from chain to chain. Thus, it’s a powerful tool for Web 3.0 developers to use as they look to decentralize the internet.
On the date of publication, Brenden Rearick did not have (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.
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