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The first half of 2022 has been one of the worst periods for cryptocurrency. Major tokens, such as Bitcoin and Ethereum are down 40% to 50% since the beginning of 2022. Overall, the crypto markets have fallen over 50% year to date (YTD). Traditionally, a bear market is when financial assets fall more than 20% from previous all-time highs. Under this classification, crypto has been in a bear market since early April 2022. Many are wondering when the bear market will end and if the top tokens can return to their all-time highs.
What Makes a Cryptocurrency Good to Hold in a Bear Market?
There are a handful of qualities that can make a cryptocurrency a good choice to hold in a bear market:
- Market cap: Tokens with a high market cap can often be more stable as they have larger amounts of capital invested. Market cap can also be an indicator of investor confidence.
- Accessibility: Some tokens can be bought easily and on a variety of exchanges. Others require lengthy procedures and fees. More accessible tokens may fare better in a bear market.
- Utility: The use cases for a token can be a major driver of demand. A token with large or varied use cases could be a better option in a bear market.
- Funding: Crypto projects can be expensive to run, so heavily funded projects may have a better chance of lasting through a bear market.
- Low regulatory risk: If the crypto markets continue to slide, more governments may begin to step in as regulators. Cryptos that may not be subject to regulation or could benefit from regulation could be a good choice.
- Community: One thing crypto investors have learned is that a strong community can propel prices. Projects with powerful communities may recover the quickest.
- Tokenomics: The amount of tokens supplied has a huge impact on the price. Tokens with limited or constant supplies may be in a better position to make it through a bear market.
Holding Cash vs. Crypto in a Bear Market
One question all crypto investors have faced in recent months is whether or not to sell their crypto and hold cash. Investors experience pros and cons to both holding crypto and holding cash in a bear market.
In terms of holding crypto, the benefits are that you could potentially earn back your losses if you are patient and wait out the bear market. Additionally, you could potentially earn interest on your crypto by staking your positions. Conversely, holding crypto could have its drawbacks if prices continue to slide.
Holding cash is beneficial in that it is often a stable way to hold value. It also takes away the risk of holding crypto if prices continue to fall. Oppositely, holding cash has an opportunity cost of potential gains if the markets recover. Cash also faces the risk of inflation, which is a major issue in the current economy.
Best Cryptocurrencies to Hold in a Bear Market
Now that you have some background on the current bear market and the pros and cons of holding crypto, let’s take a look at some of the best cryptocurrencies for a bear market.
Bitcoin
Bitcoin is by far the most popular cryptocurrency to invest in. It boasts a market cap of over $550 billion and is extremely accessible. It can be purchased on a variety of platforms, ranging from Finblox and eToro to Venmo and CashApp. Finblox is a particularly good option, as it lets you earn 5% interest on Bitcoin holdings. It also has a huge community backing its niche of digital payments on the blockchain. Bitcoin has a scheduled issuance of its supply, making it a great bet against inflation.
Ethereum
Ethereum is the second largest crypto, with a market cap of over $200 billion. It is the top blockchain for decentralized finance (DeFi) and decentralized applications (dApps). This feature gives Ethereum use cases in anything from NFTs to decentralized exchanges (DEX) and helps the project retain a strong community of engaged crypto enthusiasts. Lastly, Ethereum is planning a merge in the future, which should make the blockchain faster, more environmentally friendly, more attractive to users and able to provide even more use cases. You can buy Ethereum on Finblox, and the platform offers 4.5% APR on ETH holdings.
Chainlink
Chainlink is currently 21th largest crypto by market cap, with around $3.9 billion invested. However, this project may have one of the most applicable use cases. They are an oracle crypto that faces essentially no competition. An oracle is a bridge between the blockchain and off-chain, real world data. It uses its oracles to provide accurate and cost-effective data to blockchains and can be used in a variety of places, ranging from governments to sports. Many popular exchanges offer Chainlink, including eToro.
Polygon
Polygon is the 18th largest crypto (by market cap) with a market cap of around $4.7 billion. It is the leading Layer 2 solution, meaning that it is essentially an extension of another blockchain and can greatly aid in scalability. Polygon is a scaling solution for Ethereum. Ethereum’s lack of scalability helps Polygon increase demand for its network, as Polygon can process transactions at a fraction of the cost of Ethereum.
Polkadot
Polkadot is the 11th largest crypto with a market cap of just over $8.5 billion. It is the leading multi-chain crypto. The project is centered around interoperability or the ability for separate blockchains to communicate with each other. This exciting project is one of the only in the area and offers a competitive advantage over blockchains that are completely independent from others.
How to Store Cryptocurrencies Safely
If you plan to hold your crypto through a bear market, a wallet is the safest place to store it. There are two types of wallets: hardware and software.
Hardware wallets are physical devices that store the private codes needed to send crypto. If the physical device is not present to confirm transactions, then crypto cannot be sent. Hard wallets are regarded as the safest way to store crypto.
Software wallets store private keys online. Most software wallets are either programs or Chrome extensions. These wallets can be subject to phishing scams and other security issues but can be much easier and cheaper to use than hardware wallets.
Cryptocurrency Price Movements
The crypto market is down 50% as a whole since the beginning of 2022, and most of these losses came in April and May. However, the average bear market lasts between nine months and one year, so there still may be more room for a further slide. Conversely, the markets could turn around tomorrow; no one knows where prices are going.
When will the Crypto Bear Market End?
Many are wondering when the crypto markets are due for a reversal. It seems as though prices slide further and further everyday, with no end in sight. Some believe that the markets could fully reverse very soon while others see it taking several months to return to normal levels. Either way, it is always a good idea to have an investing game plan with stop losses, entry points and hope that prices can begin to rise again.
Frequently Asked Questions
Why is market cap a good indicator for cryptocurrency?
Typically, the larger a cryptocurrencies market cap is the more dominant it tends to be in the market. This is why many people consider the market cap with such high importance.
Whats the oldest cryptocurrecny?
Bitcoin was the first cryptocurrency created in 2009, making it the oldest cryptocurrency.
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About Caden Pok
Caden has been involved with crypto since 2018, when he began investing, trading, and mining tokens. He took part in undergraduate research studying cryptoeconomics at the University of Michigan, where he will graduate Phi Beta Kappa with a bachelor’s in economics in 2025. He is experienced with DeFi technology and multiple blockchains, currently investing in Ethereum and Bitcoin.