Bitcoin (BTC 0.10%)) And Xrp (XRP -1.51%)) It can be a little safer than certain cryptographic assets, but it is not as if they were solid when things collapse. Like the Nasdaq Composite And S&P 500 Enter the correction territory, investors are starting to worry more about a potential market accident.
And some people think about which of these two active people would better in an accident and which is worth buying in a row?
History is worth including
To start, take a look at the performance of Bitcoin and XRP during the coronavirus market accident at the beginning of 2020.
Here is the table:
Bitcoin Prix Data by ycarts
As you can see, the two assets were hard during the accident, as well as the rest of the market, which is to be expected. Then, over the next five years, the two climbed.
Bitcoin Prix Data by ycarts
Bitcoin has done slightly better since the 2020 crash, and its price action was generally less volatile than that of XRP, which is not an advantage, with the exception of those who like to sleep more deeply without worrying about the value of their investments.
But what about the next market crash?
XRP is a cryptocurrency with a value derived from its usefulness as a means of exchange rather than a value store. To have value as a means of exchange, it must be actively requested by its users, who must then transfer the part between each other, and who must also have a reason to need it in the future. Since its users are financial institutions that seek to avoid exchange costs and international monetary transfer fees, the level of health and activity of these financial institutions is a key consideration for the future demand for XRP.
Market accidents tend to coincide with periods of great uncertainty, in particular economic and financial uncertainty. Financial institutions, like most companies, are deemed to make large investments or large strategic documents for such periods. And, on average, this means that the chances are good not to need to do so much international monetary transfers. Thus, investors will probably assume that the level of request from XRP will be lower when the uncertainty is the highest.
Bitcoin, on the other hand, does not have much value derived from its utility. Although this may be a means of exchange, most investors consider it a reserve of value. This is logical given its supply dynamic, which guarantees that there is an increasingly small amount of bitcoin produced over time, generating a rarity. Rarity does not necessarily create demand, but it guarantees that the price level will continue to increase over time as long as there is demand.
Investors may tend to liquidate some of their value reserves during turbulent times so that they have enough fiduciary currency at hand to cover contingencies, but Bitcoin wise holders understand that this is a compromise, because the chances that the medal is worth in the long term is good enough thanks to its growing scarcity. Therefore, the chances are also good that holders who sell parts will become buyers again, perhaps even before the market decides that difficult times have passed.
There is only one real choice
No one knows when the next market crash will occur, but Bitcoin looks like a better crash game on the market.
It is possible to imagine the circumstances of an accident being events which create a high probability of a global or localized economic recession, which could last for years. Under these conditions, Bitcoin is unlikely to flourish. However, XRP would almost certainly suffer more, because the very thing that makes it precious, its usefulness, would simply not be very attractive, because users would reduce investments in new financial technologies rather than deepen them.
In addition, the dynamics of the Bitcoin supply will continue to grind, that there is a lot of demand. This means that when the request may come back, new buyers will be fiercely competing, which increases prices. XRP does not have a similar mechanic, even if it is a good part to buy in general.
Do not sweat the possibility of a market accident too much. If you are worried, just keep capital at hand so that you are ready to buy.
