The concept of "blue chips" is not new to the cryptocurrency entrepreneur's vocabulary, but not all industry users are familiar with it. In this new material, we will delve into what "blue chips" are and why they are crucial in the blockchain industry.
In cryptocurrency, a "blue chip" is defined by the following criteria:
- Stability
- Strong reputation
- Resilience to crises
- High liquidity
- Recognizable issuer
- Significant market capitalization
- Development prospects
This status allows crypto assets with the highest demand to gain additional visibility in the market. Looking at it, crypto investors can make more informed decisions about buying or investing in an asset. When a trend of price reduction (bearish trend) is observed in the crypto market on major trading platforms, investors start hunting for "blue chips" to preserve their savings.
Why are they called "blue chips"?
This term entered the crypto industry from American culture, specifically from Americans' love for poker. In the 19th century, poker was incredibly popular in America, and blue chips held the highest value. Shareholders of major financial organizations started drawing parallels with poker terminology in their analytical reviews, making trading issues more understandable. For example, in 1923, an employee of Dow Jones used the term "blue chip" for the first time, indicating that some stocks were trading much more successfully than others.
For a long time, stocks labeled with this term only emphasized their high value, but later, "blue chips" also gained public recognition. Companies with this status could withstand periods of economic instability, attracting new investors. Besides, achieving such a status meant that the firm had stood the test of time and had a good reputation.
How to find "blue chips" in the cryptocurrency market
A knowledgeable investor needs to periodically analyze the current market situation to build their own investment strategy. Holding onto "blue chips" is always profitable, as they often rescue entrepreneurs from crises and stabilize their capital after an unsuccessful deal.
The search for the best assets in the market typically involves several actions:
- Evaluating the capitalization of assets
Investors can find available aggregators like Cryptorank or CoinGecko online. These platforms provide all the necessary information about asset capitalization and assist in creating a comprehensive analytical overview. Experts recommend not relying on a single source.
- Analyzing the price chart
Token life cycles can be observed on one of the analytical platforms online. The price chart of an asset helps determine how many periods of decline and growth the coin has experienced and how critical they were. Evaluating these time intervals allows the investor to understand whether the causes of crisis periods were external or internal. Price charts also provide information about the token's correlation with Bitcoin and traditional assets.
- Researching the issuer's recognition
Market leaders like Bitcoin and Ethereum are now familiar to everyone, even those not involved in crypto investments. This is why they are in high demand and highly valued—they have built an audience and widespread recognition. Owners of such large companies will do everything to protect the reputation of their projects to prevent bankruptcy. To assess recognition, crypto experts use analytical platforms like Google Trends, news aggregators, and social networks.
Top 3 Most Popular "Blue Chips" in the Crypto Industry
#1 Bitcoin (BTC)
A universally recognized market leader with the highest overall capitalization, Bitcoin is the world's first digital currency. Tables correlating cryptocurrencies are often based on comparisons with BTC. Changes in the price of Bitcoin instantly impact all players in the crypto market.
Bitcoin is a well-known brand. For many who are unfamiliar with the world of digital assets, Bitcoin is synonymous with cryptocurrency as a whole. BTC often forms the foundation of an investor's cryptocurrency portfolio.
#2 Ethereum (ETH)
Currently, due to active updates to Ethereum, the entire ecosystem has gained additional popularity. The number of mentions of Ethereum on the internet has increased significantly. This has worked in favor of the native token, ETH, making it more recognized and widely used. DeFi systems, dApps, and the NFT market are built on the Ethereum platform. Due to these factors, Ethereum can be considered a stable "blue chip."
#3 Dai (DAI)
The MakerDAO platform and its stablecoin DAI introduced the possibility of crypto-lending and crypto-loans into the cryptocurrency ecosystem. DAI is pegged to the US dollar, making it a confident investment tool. It allows hedging against cryptocurrency volatility and provides entrepreneurs with stable income.
Conclusion
In conclusion, discussions about "blue chips" in the crypto industry are not just for entertainment. Crypto entrepreneurs are strategically selecting reliable tokens that are less likely to lose value significantly in times of crisis.
Comprehensive research of the crypto market will not only help identify the best "blue chips" but also better navigate its conditions.
The easiest way to buy, sell or exchange coins is to use SimpleSwap services.
If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “6 Things to Do Before Crypto Bull Run” and “Extended Reality Explained”.
