crypto strategy

Can Ethereum and Dogecoin survive a global recession?

Key points to remember

  • Dogecoin has been in the news again lately, after Elon Musk announced the Tesla Cyberwhistle (yes, really) that could only be purchased with Dogecoin. He’s already sold out.
  • Ethereum is also hot, as the long-awaited “merger” and move to proof-of-stake has finally happened.
  • Dogecoin and Ethereum have been around in crypto terms for a long time, which gives them a better chance of survival than most. That said, nothing in the world of investing is guaranteed.

The threat of a recession looms constantly at the moment. We have had two consecutive quarters of negative growth, inflation remains very high and against this backdrop the crypto sector has taken an absolute beating so far in 2022.

Even the biggest crypto of them all, bitcoin, is down more than 50% since the start of the year. When the largest and oldest coin in existence experiences such volatility, it makes holders nervous.

For those holding smaller coins or tokens, even those at the top of the market cap list like Ethereum and Dogecoin, these nerfs go up another level. And with good reason.

Crypto history is littered with big names that went bankrupt. Projects like Terra Luna, BitConnect, and OneCoin have left investors holding next to nothing, with some losing millions.

Given the tough road we’re on across the economy, some investors may be wondering what’s next. More importantly, they will wonder if this is the one they have in their wallet.

Besides all this general market volatility, Ethereum and Dogecoin in particular have been in the news lately, but for very different reasons. So what happened to these two, and what are their chances of surviving the (potential) recession to come?

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DogeCoin and the cyberwhistle

Dogecoin seems to be the meme that never dies. This week, it’s in the news again because, surprise, surprise, of a tweet from Elon Musk.

This is because Tesla recently launched its latest product.

It’s not a new car. This is not a new rocket. It’s not even a new humanoid robot. It’s a whistle. Sure, it has a sleek, modern design that resembles the Cybertruck, but nonetheless, it’s a $60 whistle.

To be precise, it’s a whistle of 1,000 Dogecoins.

Always one to grab headlines, Musk announced that the Cyberwhistle could only be purchased with the meme coin. The unusual pricing strategy did not deter whistlers, as it sold out almost instantly.

It’s been a crazy few years for the doge, but he’s shown remarkable stamina for a play that was created as a joke. Although it premiered in 2013, it didn’t achieve mainstream notoriety until the short-squeeze craze of 2021.

In January 2021, it soared over 800% to $0.07 in just 24 hours. It sparked a flurry of publicity that drew mentions from Musk, Snoop Dogg, Mark Cuban and Logan Paul. In April, it had reached $0.10 and it hit an all-time high of $0.74 in early May.

Since then, it has come down to earth in a big way and is currently hovering around the $0.06 mark.

Now that the roller coaster seems to have set in, will dogecoin survive a recession? Nobody knows for sure, but dogecoin has some major points in its favor. First of all, the community that supports it is dedicated.

Grassroots support for maintaining Dogecoin and advocating for its adoption is important. The Dogecoin subreddit has over 2 million subscribers, and the presence of doge boosters on social media platforms like YouTube and Twitter is almost unmatched.

Having a dedicated support base provides a lot more buyers when prices start to drop, which in itself can help keep the price at a certain level.

The second card the Doge has up his sleeve is simply his longevity. It may sound strange to say, but it has managed to weather several crypto winters and some of the most extreme volatilities seen in the crypto world.

No one can say for sure if dogecoin will survive a recession, but so far it has proven to be a remarkably resilient pup.

The Ethereum merger

Etherum is also in the news this week, but for something a little more serious than Cyberwhistle.

For some time now, ‘fusion‘ has been touted as one of the greatest innovations in crypto history. Essentially, this involves the world’s second largest cryptocurrency moving from “proof of work” to “proof of stake”.

Since its inception, Ethereum has operated on a proof-of-work system. This is the traditional form of cryptography that powers many blockchains, including that used by Bitcoin. This system allows miners to compete to verify transactions on the blockchain, with winners being rewarded with a fixed amount of the currency in question.

This type of cryptography uses a lot of processing power due to the fact that complex mathematical problems are used as a method of competition. These require specialized computers that consume a lot of energy.

The problem with proof of work is that although it is very secure, it is not very fast and therefore not very scalable. Anyone who spends time in the crypto world will know that the fees for Ethereum and other tokens that use the Ethereum blockchain have been huge lately.

This was especially important given that the majority of NFT and DeFi protocols also use the Ethereum network.

The switch to proof of stake aims to solve this problem.

What is Proof of Stake?

The validation of transactions on the network is always done according to the same consensus method. This decentralization is a key pillar of crypto, which means that no one person or organization acts as an intermediary to approve or deny a transaction.

Where Proof of Work selects these validators based on their ability to solve mathematical problems, Proof of Stake selects them based on validators who contribute or “stake” the currency.

This is based on both the amount a validator has staked, as well as the length of time they have staked. This means that the network rewards those who hold the most currency the longest, which in theory strengthens the network over time by ensuring that participants commit to its longevity and security.

Since late 2020, Ethereum developers have been running the two processes side by side. To date, these have been merged into one, and going forward, the Ethereum network will rely exclusively on proof-of-stake.

Will Ethereum survive a recession?

As you can see, a lot has happened behind the scenes with Ethereum, and much of the cryptocurrency world runs on its technology. This puts them in a unique position. Not only are Ethereum developers and holders invested in their survival, but so is much of the rest of the crypto world.

They’re like the well-connected friend who brings their friends to parties and VIP lists. They know that if Ethereum goes down, the party stops for everyone.

With that in mind, he has a very good chance of going the distance. It was also created in 2013, which means it has already survived crypto winters and turbulent economic times.

Nothing in investing, and in particular crypto investing, is guaranteed, but Ethereum is more likely than most to be here for the long haul.

What is the best way to invest in crypto?

As with any form of investing, trying to pick individual holdings can end in disaster. Betting on an entire sector or industry is one thing, but there are simply too many variables and unexpected events that can derail an individual business or cryptocurrency.

This is why one of the golden rules of investing is diversification.

By spreading your investment over many different individual investments, you reduce the risk of losing money in the long term, while retaining the potential for big gains if things go well.

This can be difficult to do with crypto, which is why we created the Encryption kit. This kit uses investments through trusts and funds to access a selection of large-cap crypto projects. It includes big boys Bitcoin and Ethereum as well as a number of other altcoins which may include projects like Cardano, Solana, and Chainlink.

These positions change depending on the underlying investment within trusts and funds, meaning you are exposed to expert crypto knowledge, even if you are not an expert yourself.

Download today to access AI-powered investment strategies. When you deposit $100, we add an additional $100 to your account.


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