Top 3 Cryptocurrencies That Might Withstand A Recession And Inflation Well! Analysis of reliable StableCoins – The ₿log

There is no Paul Revere in 2022 walking around shouting that a recession is coming. But some predict another economic downturn is inevitable. Soaring inflation forces the Federal Reserve to raise interest rates. And economist Mohamed El-Erian thinks these rate hikes could lead to a recession.

If El-Erian is correct, the attractive options available to investors are rather limited. But there are alternatives worth considering. Here are three cryptocurrencies that could hold up well in a recession.

1.Tether

Cryptocurrencies have several key advantages. The low volatility is usually not listed. However, Tether (USDT 0.01%) stands out as a notable exception. Over the past 12 months, the price of Tether has rarely decreased by more than 1%even when other cryptos were crashing.

The reason why the price of Tether experiences such low volatility is that it is a stablecoin. Tether’s stability comes from being pegged to the US dollar.

Among cryptocurrencies, only Bitcoin and Ethereum have a higher market capitalization to that of Tether. It was initially built on the Bitcoin blockchain, but later expanded to other blockchains including Ethereum.

For many investors, buying Tether is largely a defensive game. Invest in the stablecoin in a recession could therefore make sense. It is also possible to lend Tether tokens for returns ranging from 3% to around 20%.

However, Tether is not without risk. There has been controversy in the past over whether its tokens are fully backed by US dollar reserves.

2. USD Coin

You probably won’t find a less spectacular cryptocurrency than USD Coin (USDC 0.00%). Like Tether, USD Coin is a dollar-pegged stablecoin. Its price has not fluctuated at all since its launch in October 2018.

USD Coin has a cmarket capitalization of $81.7 billion. That’s enough to rank it fifth among all cryptocurrencies and second among stablecoins, behind Tether.

The positives of Tether are generally applicable to USD Coin. Probably the most important differentiator for USD Coin is its reputation for transparency. The stablecoin was launched by the Center Consortium, which has two founding members: payment services company Circle and the Coinbase cryptocurrency exchange. Unlike some cryptocurrency companies, Circle and Coinbase both adhere to applicable regulations.

Every USD coin in circulation is fully backed by dollar reserves or dollar-denominated assets with an equivalent fair value. All of these reserves are held in accounts maintained by financial institutions regulated by the US government. This transparency has helped USD Coin gain traction on Tether over the past year.

3. Terra USD

There are no surprises with the third crypto on our list. TerraUSD ( UST 0.02% ), like Tether and USD Coin, is also a stablecoin. It ranks 14th among cryptocurrencies based on market capitalization. However, TerraUSD has been less stable than its peers over the past 12 months, with its price temporarily dropping as much as 8% in May 2021.

This higher volatility stems from a sharp drop last year for the Terra Luna token. Both cryptocurrencies are part of the larger Terra ecosystem.

However, this ecosystem offers some advantages to TerraUSD investors. Perhaps the most important is the Anchor protocol. This decentralized savings and loan application offers a return of around 19.5% on TerraUSD stablecoins.

These high yields are unlikely to be sustainable. Two major cryptocurrency investment companies, polygon and Arca, push the Anchor protocol to reduce its yields. But TerraUSD could nonetheless be an attractive port in the storm if and when a recession hits the global economy.

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Top 3 Cryptocurrencies That Might Withstand A Recession And Inflation Well! Analysis of reliable StableCoins – The ₿log


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