The origin of the term ‘blue chip’ comes from poker. Chips in blue are highest in value in a set of discs consisting of red, white and blue colours. The terminology has found its way into the stock markets as well as the cryptocurrency market, with blue chip cryptocurrency being the most valuable asset. It applies to any financial market — be it equity or crypto. Let’s find out more about blue chip cryptocurrency investing in this article.
Understanding Blue Chip cryptocurrency
As you may already have figured, cryptocurrencies are highly volatile assets. They’re a good investment, but only if you know what you are doing. Usually, the blue chip cryptocurrencies have the highest market cap. These typically tend to be less volatile as compared to cryptocurrencies with a lower market cap. For instance, let us consider Bitcoin and Ether. These are the two largest cryptocurrencies by market capitalization. The performance of other cryptos and the market is usually benckmarked against the performance of these cryptos.
Let us understand how blue chip cryptocurrencies are setting the industry benchmarks. Here are some of the features unique to cryptos.
Features of Crypto tokens
Cryptocurrencies are gaining a lot of prominence for their interesting features for which they are being adopted rapidly. Here are some of the vital ones.
Digital access: Cryptocurrencies are digital assets with no physical form, unlike traditional currency. As you store fiat in your wallet, cryptos are safely put in digital wallets. You can store your cryptos in two types of wallets – hot or cold. Hot wallets are always connected to the internet, while cold wallets allow you to store crypto offline.
Decentralization: Cryptocurrencies are decentralized (in varying degrees) in nature. It means neither the government, bank, nor any other entity can control the system. They are maintained through distributed consensus where no one can control over it. Cryptos are spread across in a systematic digital network without any middlemen. Thereby, reducing human error or bias to a great extent.
Encryption: Cryptography ensures that the problems faced with traditional currency — double-spending and fake bills, for instance — decreses.
Peer-to-peer network: People can directly exchange their digital currencies without any third party or involvement of any central authority. With blockchain, the transactions are evlauated on a P2P network. This network of computers can store a copy of the ledger of transactions.
Pseudonymous: The identity of the people making their transactions through cryptos is not disclosed except the public address. This address does not have to necessarily tie back to an individual’s identity.
Factors that drive growth in Blue Chip Crypto
The factors that drive growth in the blue chip crypto investing are:
Adoption: The adoption of blue chip cryptocurrencies across the globe is increasing. With large corporations gradually warming up to crypto, it is safe to assume that smart money will flow into blue chip cryptocurrencies.
Utility: One of the biggest reasons for the blue chip cryptos’ success is that they address real-world problems. For instance, Ethereum can help build smart contracts. The majority of the decentralized apps (dApps) today are built on the Ethereum blockchain.
Use cases: Blue chip cryptocurrencies release upgrades to either improve their security or increase usability. These cryptos garner massive attention whenever an upgrade is announced that plans to increase the use case. Such hype attracts more investors. For example, Ethereum’s upgrade to proof-of-stake is most awaited.
Investing in Blue Chip crypto tokens
The top 5 cryptocurrencies by market cap at the time of writing this blog, are:
- Binance Coin
This, of course, excludes stablecoins.
Blue chip cryptocurrency investing can take various forms. One could pick and make their own portfolio. Or you can even go with something that is already pre-packaged, keeping in mind the aforesaid features. Meet the Blue Chip Coin Set!
What is the Blue Chip Coin Set?
The top 5 cryptocurrencies with the highest market cap construct this Coin Set. As discussed earlier, these are blue chip cryptos that have shown the most resilience against market swings. And therefore, many consider this Coin Set as an all-weather basket. It can add value to most portfolios.
The Crypto Blue Chip Coin Set, in the current configuration, lists Bitcoin, Ethereum, Binance Coin, Ripple, and Cardano as its constituents.
Blue Chip Coin Set Constituents
Bitcoin is the oldest and largest cryptocurrency (by market cap) in the crypto universe. BTC has transformed from a speculative asset to a store of value over the course of its existence. With advantages such as being easily accessible, highly liquid — and, according to some, high-return potential — this is a cryptocurrency most investors have considered at some point. As countries start to adopt Bitcoin in some way or the other, investors are betting on the upside potential. Nearly 50% of your investment goes to Bitcoin when you invest in a Crypto Blue Chip Coin Set.
The next constituent of the Crypto Blue Chip Coin Set is the second-largest cryptocurrency by market cap, Ether (ETH). The Ethereum Blockchain is extensively used to build smart contracts and decentralized applications (dApps). In the Blue Chip Coin Set, ETH holds a weightage of 33.44%.
Next comes the Binance Coin (BNB). Binance is the largest cryptocurrency exchange by trading volume, and BNB is the platform’s utility token. You can use BNB to pay for goods and services on Binance Smart Chain, which makes it valuable. BNB also allows trading and investment in other securities. So, for its potential, 6.56% of your investment in this Coin Set goes to BNB.
Being in existence since 2012, with transactions being quicker and cheaper comparatively, Ripple (XRP) has a 5% weightage on the Crypto Blue Chip Coin Set. Banks can source liquidity on-demand in real-time using XRP. The remaining 5% weightage is occupied by Cardano (ADA) as the project uses proof-of-stake consensus and is one of the fast-growing blockchain.
The weightage of each token in the Crypto Blue Chip Coin Set is proportional to its market cap. You may ask about what benefits you can gain out of this crypto basket. Here they are.
Advantages of investing in Blue Chip Crypto Coin Set
There are many advantages of investing in the blue chip crypto coin set. Let’s understand them here.
Access to top 5 blue chip tokens/coins
The Crypto Blue Chip Coin Set gives you an access to the top 5 cryptocurrencies in the market with a single click. Rather than investing in each of the cryptos, this crypto basket allows to you to invest in all of them at once.
Expertly curated portfolios- no hassle for you
If you attempt to pick and invest in different cryptocurrencies, it is solely your job to analyze them to figure out the most promising ones. It could be extremely time-consuming and tricky. This is where the Crypto Blue Chip Coin Set comes to your rescue. Coin Set is curated and designed by the in-house experts at Mudrex with more than a decade of experience in managing funds. Coin Sets are evaluated every month to check if rebalancing is necessary. It is done after closely analyzing the market performance, utility, and token’s long-term goals. This can be a good start to blue chip cryptocurrency investing.
SIP is better than buying the dip
When you want to buy the dip, you need to recognise the dip, which can be pretty challenging. But suppose you start investing a certain amount on a Crypto Blue Chip Coin Set using SIP. You can average out the volatility through the combined power of Dollar-cost Averaging (DCA) and systematic investing.
Helps in diversification
Investing in Coin Sets can help you diversify your crypto portfolio while maintaining balance considering the volatility factor. Since the crypto market is highly volatile, investing in one particular crypto might not always be a good option.
Who should invest in the Blue Chip Crypto Coin Set?
Crypto Blue Chip Coin Set is an all-weather basket suitable for long-term and low-risk appetite investors. It is also the best fit for new investors looking to invest in crypto. The Coin Set also allows investors to invest monthly, weekly or daily with capital as low as $5.
For the new investors wanting to start their blue chip cryptocurrency investing, starting with blue chip tokens can be ideal. Since the crypto market is highly volatile, investing in something like Blue Chip Crypto Coin Set can save your time and give you better risk-adjusted returns. Investors can also invest in this Coin Set through SIP and average out volatility.