雅虎香港財經 3 Cryptos to Buy for a Black Swan Market Crash
By definition, investors cannot prepare for a black swan event. Black swan events are those which have both extremely negative consequences and are essentially impossible to predict., such as a black swan market crash
At the same time, investors should consider that the possibility of an extremely negative event is arguably as high as it’s ever been. The economy teeters on the brink of recession.
Economists are arguing whether we are currently in a recession following two consecutive quarters of GDP contraction. Inflation reached 8.5% in July. And while that was an improvement from the 9.1% rate in June, it hardly indicates stability.
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Credit card debt is rising at rates that haven’t been seen in decades. And on and on. So, it really does feel that a black swan event could occur, crashing the stock market. Although crypto prices are trending more in line with stocks as time goes on, there’s a chance that if that happens cryptocurrency could survive relatively unscathed making these cryptos more attractive. With that all in mind, here are the three cryptos to buy if there’s a black swan market crash:
Solana (SOL-USD)
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Solana (SOL-USD) remains a strong network after becoming popular over the last year. Which cryptocurrencies could survive a black swan event that crashes the stock market is a matter of conjecture. But it makes sense that investors should look for projects with a lot of overall strength and strong prospects.
That accurately describes Solana, a project noted for its massive growth in 2021. In fact, Solana’s price went from $1.80 at the beginning of the year to $170 by its end. The massive 9,360% increase certainly made many people a lot of money very quickly. But more importantly, it has kept Solana relevant even as crypto tanked in 2022.
It currently trades for around $38. But the point is that Solana is well-established and it is unlikely to run to zero outside of a self-inflicted downfall a-la Terra (LUNA-USD). Nobody is currently intimating that Solana has problems of that nature. Rather, the news is mostly positive with reports indicating it now has more than 1,900 block-producing nodes, nearly 1,700 of which are run independently.
Ethereum (ETH-USD)
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Ethereum (ETH-USD) is the second most valuable cryptocurrency, with a market capitalization of $229.4 billion. It is second only to Bitcoin (BTC-USD) and its $454.5 billion market capitalization. So, it makes sense that in the event of a stock market crashing black swan event it would fare well.
The logic here is that when the traditional financial markets truly crash, the alternative cryptocurrency market will emerge as a bulwark against true chaos. Investors may be scratching their heads at that notion as they have seen crypto prices decline alongside stock prices this year. And it’s true, they’re becoming more tightly bound.
But I’m implying that crypto will disentangle from the stock market in a full-on stock market crash. And that would mean that Ethereum should see massive capital inflows given its size and position.
There’s also reason to buy it more immediately as its merge from a proof-of-work network to a proof-of-stake network is set to occur on Sept. 15. This merge should provide quick gains for those willing to take a bit of risk.
Dogecoin (DOGE-USD)
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Investors should consider buying Dogecoin (DOGE-USD) in anticipation of a black swan event for somewhat different reasons than either Solana or Ethereum. Dogecoin is clearly on the speculative side of crypto assets whereas Solana and Ethereum are much more established.
The logic for buying DOGE is that a stock market crash will again trigger a spike in interest in the non-traditional financial markets should the traditional market fail. Speculative capital will flood into Dogecoin as it is a proven entity among inexpensive crypto assets.
It isn’t hard to imagine speculative market makers quickly pumping capital into Dogecoin in such a scenario. Dogecoin’s 10X movement in early 2021 inherently makes it attractive for speculative investors.
If nothing else, take solace in the fact that Mark Cuban recently stated that he believes Dogecoin has greater potential application than Cardano (ADA-USD). His opinion alone has the kind of force that makes markets and can net investors quick gains.
On the date of publication, Alex Sirois 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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks.Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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