In the world of cryptocurrencies, it is important to choose assets that will help preserve your investments in the long term. One of the most valuable and stable assets is Bitcoin (BTC). Although its price has occasionally dropped, it still enjoys significant interest from both retail and institutional investors. Holding Bitcoin means investing in an asset that has great potential and growth prospects.
Users have become more trusting of cryptocurrencies and increasingly use them for trading operations. Large hedge funds and institutional investors have also begun to enter this segment.
However, full integration into the financial system is still a long way off. The main issue is the high volatility of digital assets. A daily price fluctuation of 10% is common on cryptocurrency exchanges. Therefore, many wonder which cryptocurrency is the most stable today. Experts highlight several types of coins, each with its own characteristics.
Stable Cryptocurrencies
The frequent volatility of cryptocurrencies is explained by the absence of a regulator that would oversee the price stability of assets. The value of cryptocurrencies is formed based on supply and demand, as well as people’s trust that they will not depreciate. Despite this, the value of digital assets can both rise and fall. To assess the stability of cryptocurrencies, a benchmark is necessary.
Stablecoins
Stablecoins have emerged as a new tool in the market, combining the characteristics of virtual currencies (transparency, low fees, high transaction speeds) with those of fiat money (minimal volatility). Stable cryptocurrencies are pegged to official assets with fixed values, such as gold, national currencies, or oil. The emergence of such assets has improved the circulation of coins and trading operations involving them. The idea of creating stablecoins is not new; a similar mechanism is known in the banking system as a fixed exchange rate.
Types of Stablecoins
The first cryptocurrency pegged to an external asset, Realcoin, appeared in November 2014. Its initiator was J.R. Willett, who published the article “The Second Bitcoin Whitepaper.” In 2015, Realcoin was renamed Tether (USDT). There are several mechanisms for ensuring the stability of digital assets:
- Tokenization of Fiat Money: The price of the coin corresponds to national currencies (1:1).
- Backing by Tangible Assets: The prices of stablecoins are supported by natural resources, precious metals, etc.
- Algorithmic Stablecoins: The price is regulated by changing the money supply using smart contracts.
- Backing by Other Cryptocurrencies: The base asset consists of more stable and liquid coins (BTC, ETH, XRP).
Cryptocurrencies with the Least Volatility
In addition to stablecoins, cryptocurrencies with a consistent upward trend can also be considered stable assets. Their prices are still subject to fluctuations, but when analyzing a large timeframe, it is evident that the price consistently increases. In this context, stability is viewed as a lower risk of investment loss.
User trust also affects the price of a cryptocurrency. Digital assets that have held top positions in rankings for a long time appear more stable. For example, Bitcoin, despite its ups and downs, is associated with reliable long-term investments. New projects evoke less trust, as not everyone understands blockchain technology. Investors tend to wait and evaluate the behavior of a new coin on the exchange.
List of the Most Stable Cryptocurrencies
Stablecoins have received a positive response in the crypto community. These assets allow for reduced transaction fees and help circumvent certain banking restrictions. Traders actively use them for short trades and risk hedging. The success of Tether has led to the creation of numerous similar projects. From 2018 to 2021, around 200 new products were launched in the market based on the principles of USDT.
USD Coin (USDC)
USD Coin was added to the Coinbase platform in September 2018. It was developed by Circle and Centre, which were later joined by investment funds Tusk Ventures, General Catalyst, and Blockchain Capital. High trust in USDC is ensured by regular financial audits that confirm the dollar backing of all issued tokens. As of February 2022, there was $51 billion USDC in circulation.
Binance USD (BUSD)
BUSD was launched in September 2019 thanks to the joint efforts of the Binance cryptocurrency exchange and the Paxos blockchain platform. Binance was responsible for the technical development, while Paxos controlled the backing of the stablecoin. Paxos, operating under a license, received approval from the New York Department of Financial Services (NY DFS) to issue BUSD. Advantages of BUSD include:
- No transaction fees when buying or selling on Binance and Paxos.
- Quick addition of new blocks to the ledger (in 1 second).
- Compatibility with ERC-20 and BEP-2 networks.
- A new tool for automated market-making — Binance Liquid Swap.
Tether (USDT)
Tether accounts for about 65% of all transactions on cryptocurrency exchanges. As of early 2022, USDT is the most integrated digital currency, operating on platforms such as Ethereum, Solana, Tron, EOS, Algorand, and others. The stablecoin is also actively used in the DeFi space. In February 2022, the market capitalization of USDT was $77.9 billion.
MakerDAO (DAI)
DAI is an ERC-20 standard token pegged to the USD (1:1) and backed by Ethereum coins. Users wishing to acquire DAI send the corresponding amount of ETH to the platform, treating the transaction as a loan secured by collateral. Upon reverse exchange, the returned tokens are burned to mitigate inflation. DAI is characterized by decentralization: the generation of coins occurs with each interaction with the smart contract and does not depend on the issuing company.
TerraUSD (UST)
Launched in 2018, the TerraUSD project aimed to create a decentralized token on a scalable blockchain. In 2019, the coin was added to the Bittrex cryptocurrency exchange, immediately attracting the attention of traders. The unique generation of UST involves burning an equivalent asset of the platform — Luna, which makes working with the token profitable and accessible to any user.
OPEX Token (OPX)
OPX is a stablecoin (digital asset) pegged to the Kyrgyz Som (KGS) and designed to facilitate payment transactions and protect against the volatility inherent in many cryptocurrencies.
The goal of OPX Token is to create a reliable and efficient means of payment that will promote economic growth and development in Kyrgyzstan. The OPX cryptocurrency helps reduce costs associated with international payments and simplifies commercial operations.
Cryptocurrencies with the Least Volatility
A distinguishing feature of most digital assets is their sharp and significant fluctuations in market price. However, there are cryptocurrencies that have proven their viability and utility. Although they are also volatile, their price tends to recover to previous levels or even rise after a drop. Such coins can be considered stable, especially for long-term investment.
Bitcoin (BTC)
The price of the first cryptocurrency has increased more than 100 million times since its inception. No financial (investment) instrument has shown such performance over the past 16 years. As of February 2022, Bitcoin’s market capitalization was $830 billion, with a daily trading volume of $32 billion. This allows BTC to be regarded as a stable asset suitable for hedging against inflation and investing in new altcoins.
When you decide to manage your cryptocurrency investments, it’s important to consider promising storage opportunities. By choosing Bitcoin, you can minimize risks and lose less money during market fluctuations. The main reason BTC remains one of the top assets in the crypto world lies in its resilience and support from the global crypto community.
With this approach, your actions in learning about and investing in cryptocurrencies will be more informed and protected against significant losses.
Ethereum (ETH)
This digital asset ranks second only to Bitcoin in terms of market capitalization. Besides having high daily trading volumes and relatively low volatility, Ethereum attracts attention due to its capabilities. A vast number of services have been developed on the ETH blockchain. Smart contracts are a key element of many crypto projects, and ETH is often used where they are implemented. This demand gives investors confidence in the stability and value of Ethereum.
Ripple (XRP)
Despite a significant price difference compared to BTC and ETH, this digital currency has become popular for trading and investments. In February 2022, XRP was among the top-rated cryptocurrencies on Crypto.ru. Ripple transactions are fast, reliable, and inexpensive, making the platform attractive to large companies. Among the project’s partners are LianLian International (China), American Express (USA), and the Central Bank of Saudi Arabia. The developers initially aimed to create a system for international transfers capable of competing with SWIFT.
Tron (TRX)
The main idea of the platform’s founder, Justin Sun, is the exchange and sale of content. On the Tron blockchain, authors can interact with clients without intermediaries, which resembles the functioning of social networks while preserving personal information. The project was created in August 2017 on the Ethereum blockchain but presented its own technology based on the Proof-of-Stake algorithm with Validation consensus just 10 months later. Thanks to the platform’s new features (token issuance, greater scalability, high transaction speed), Tron is considered a next-generation blockchain. At the beginning of 2022, the asset’s market capitalization was $6.9 billion.
Binance Coin (BNB)
The largest cryptocurrency exchange, Binance, launched its native token in 2017. Initially, BNB provided traders with discounts on fees, but as the platform evolved, the token’s functions expanded. By early 2022, it was being used for staking, paying for smart contracts, and DeFi applications. The internal token has become a full-fledged financial instrument. In February 2022, BNB ranked 4th in market capitalization on Crypto.ru, with a trading volume of $2 billion over 24 hours.
Conclusion
In the world of cryptocurrencies, stability is a rarity, but some digital assets have managed to prove their reliability and resilience. Bitcoin (BTC) continues to hold the lead due to its long history and significant market capitalization, making it a reliable tool for long-term investments. Ethereum (ETH), with its vast array of applications and smart contracts, is also a key player, attracting investor attention with its functionality and continuous growth.
Stablecoins, such as Tether (USDT) and USD Coin (USDC), have introduced a new level of stability to the market by providing minimal volatility through their ties to real assets. These digital assets have made cryptocurrency transactions more predictable and secure, which is especially important for traders and institutional investors.
Ripple (XRP) and Binance Coin (BNB) also demonstrate a high degree of trust and stability due to the support of major companies and continuous innovation. Tron (TRX), with its unique model of interaction between authors and users, continues to attract attention for its scalability and transaction speed.
Thus, when choosing a cryptocurrency for investment, it is important to consider not only the current price and market capitalization but also functionality, history, user trust, and potential for future growth. In the world of cryptocurrencies, stability is not just about price consistency; it is about the ability of an asset to adapt to changes and continue to evolve while maintaining its value for investors.
