Blue Chip Cryptos: Is It Worth Investing In? - Freewallet (2024)

The term blue chip stocks have been around for one hundred years. In 1923, the stocks with the best market performance got the nickname “blue chips.” The term originates from the poker game, where blue chips are more valuable than chips of other colors.

As the cryptocurrency market inherits much from the stock market, no wonder the “blue chip” term naturally became a part of the crypto vocabulary. Blue chip cryptos are the digital assets with the most market cap, the best market performance, the least volatility, those that survive crypto market downfalls, etc.

In this article, we will discuss the characteristics of blue chip stocks and crypto coins to see similarities and differences. We’ll see if blue chip cryptocurrencies are worth investing in and name the most notable cryptos fitting this notion.

Blue Chip Meaning

The shares of the best-known corporations, those that traded better than the others, were named “blue chip stocks,” referencing the poker game chips with the highest value. In the 1920s, by blue chip stocks, people meant shares with $200+ value. Today, the shares’ cost is less relevant than the qualities of the companies behind these stocks. The blue chip companies are known by the significant public, well-established, and boast neat financial state. Some regard companies as blue chip-level if their market cap exceeds $10 billion. However, there are no strict characteristics that make the corporation a blue-chip company.

These companies have large market capitalization and high liquidity. The stocks of these companies are traded on the biggest exchanges. If the corporation is classified as a blue chip company, it means that it has been growing steadily for years and paying dividends consistently. Blue chip stocks are suitable for those who prefer slow and steady growth without surprises, whether pleasant or not. These stocks also work as a store of value and hedge against inflation. Examples are Nike, Coca-Cola, Apple, Google, Walmart, and so on.

Most consider blue-chip stocks safe investments that promise stable returns and no surprise downfalls. However, history knows several instances of blue chip stocks losing a vast portion of their value in exceptional circ*mstances. Another thing you should realize about blue chip stocks is that compared to riskier assets. They don’t have much potential to bring investors huge returns quickly.

What Makes a Crypto Blue Chip?

As you can see, there is no strict general definition of blue chip stocks. Therefore, you won’t be surprised to learn that cryptocurrencies don’t have them. However, the term is in use, and we should talk a little about blue chip cryptocurrencies.

What gives a particular cryptocurrency a blue chip status? Crypto can be regarded as a blue chip asset if it has high liquidity and market cap, if its volatility is somewhat low, and if it has a long-lasting high reputation. The recognition from institutions is another factor contributing to the blue chip crypto status.

You will hardly ever find any of the top crypto coins among the top gainers or losers of the week/month, as these coins are not nearly as volatile as the little-known cryptocurrencies. Bitcoin and Ethereum don’t lose 70% in price in one week, nor gain 1,000% in several days — something that happens with altcoins used in the pump and dump schemes.

Bitcoin and Ethereum go through price leaps occasionally, and they are pretty volatile if you compare them to the blue-chip stocks. Still, these cryptocurrencies are relatively stable and predictable compared to small crypto coins with a market cap well below $50,000.

Financial and academic institutions adopt and research the top cryptocurrencies. Coins with multi-billion dollar market capitalization levels attract much attention from financial experts and professionals. Some crypto coins with a lower market cap but ambitious technology (e.g., Basic Attention Token) can boast strong coverage and massive support from holders and users. Still, it’s not enough to call them blue-chip cryptos.

List of Blue Chip Cryptos

The first two examples that come to mind when discussing blue-chip cryptocurrencies are Bitcoin and Ethereum. The former is the first, most famous, unbeaten cryptocurrency. The latter is the cryptocurrency representing the revolutionary decentralized ecosystem that changed the world of cryptocurrencies and created the basis for the modern-era blockchain industry. Both of the coins are very popular.

Bitcoin has always been the top cryptocurrency and still is. Throughout the years, the first cryptocurrency received much criticism concerning environmental harm, low transaction speed, lack of anonymity, potential centralization, etc. However, people still talk about Bitcoin, they use it and prefer to keep their savings in BTC. Even though this coin has a history of ups and downs, the overall long-term trend is ascending.

Bitcoin is still an emblem of cryptocurrencies. Some even use the words “Bitcoin” and “cryptocurrency” interchangeably. Of course, we cannot equalize Bitcoin and cryptocurrencies per se, but it speaks a lot about the status of this currency.

Bitcoin is the crypto dominating the crypto market. As of March 1, 2023, the BTC dominance in the crypto segment is 43%. It is the top coin in terms of market cap. The BTC capitalization exceeds $450 billion, making it one of the top 20 assets with the highest market capitalization.

Ether (ETH) is the title crypto coin of the Ethereum network. Its market cap is around 50th among all the world’s assets with the highest market cap. Ether is the next crypto to Bitcoin in terms of capitalization. As of March 1, 2023, its market cap is nearly $9 billion. You can see the vast gap between Bitcoin and the rest of the crypto market.

Nevertheless, Ethereum has preserved its second position for many years. For a moment, in 2018, XRP took over the second position, but Ether regained its place in the charts and has been right next to BTC ever since. Bitcoin introduced cryptocurrencies and blockchain to people. Ethereum radically developed and expanded the potential of blockchain and became an essential subject for the financial and scientific worlds.

The integral connection between Ethereum and DeFi sector and the NFTs market cemented the platform’s and Ether’s position among the leaders of the cryptocurrency world.

We should stress that the cryptocurrency market is very young, and it’s too early to state that any crypto coins, including Bitcoin, have withstood the test of time. So we call some of the cryptos “blue chip,” understanding they lack some of the qualities of the blue-chip stocks.

But if we decide to stick with the term, we can call the cryptocurrencies from the list below blue-chip cryptos:

• Bitcoin (BTC)
• Ether (ETH)
• XRP (XRP)
• Cardano (ADA)
• Litecoin (LTC)
• Binance Coin (BNB)
• Bitcoin Cash (BCH)
• Monero (XMR)
• IOTA (MIOTA)
• Tron (TRON)

Investing In Blue Chip Cryptos

Investing in blue chip cryptos is an excellent way to introduce yourself to the crypto world. Blue chip coins are less volatile than more minor projects, so even if you make mistakes, you don’t lose too much and have a chance of a price rebound. At the same time, if you win, you gain less than in the case of investing in riskier, more volatile assets.

We can consider investing in blue chip coins, a conservative investment that won’t make you rich but will probably bring some moderate and stable returns in the long run.

Summing Up

In conclusion, we must say that it’s too early to call any cryptocurrencies safe investment — something that can be said about blue chip stocks. Most probably, the crypto market will establish itself better in the near future. Probably, all of the modern-day leaders of the crypto market will become real solid and safe investments, and we will have more reasons to put them in line with blue chip stocks. What we call blue-chip cryptos today is a relatively safe investment if we compare these coins to the rest of the crypto market. That’s why the term is pretty legit — especially considering the huge market cap of any of the top 10 cryptocurrencies.

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