The term "blue-chip" originates from the poker game. In America in the 19th century, poker was very popular. People even exchanged poker chips with each other, and blue-chips had the greatest value.
Blue-chips are assets that have stood the test of time. These assets are valuable, stable, and established. They are usually publicly known projects that are considered high-quality investments, and have a high success chance in adverse economic times. Moreover, these assets are usually available for companies that have been operating for many years.
Cryptocurrencies called blue-chips are established with institutional status, strong reputation, higher liquidity and lower volatility.
- and many others
Are blue-chip cryptocurrencies bear market resistant?
By calling cryptocurrency a "blue chip" doesn't mean it can't be heavily impacted by a bear market. A bear market can seriously affect the value of all cryptocurrencies. A prime example of this is BTC. It is considered a "safety" in the cryptocurrency world and should be the biggest blue-chip you can buy. Its price was around 69,000 USD in November, 2021, but in November, 2022 its price is somewhere around 17,000 USD.
Most of the major cryptocurrencies have a similar story, all affected by the bear market and the overall mood of the world economies.
We can say with certainty that no blue-chip is 100% safe in a bear market. You cannot be sure that cryptocurrencies will not go down and that your investment will not be affected in some way, which is an inherent part of the risks that you have to bear with these investment types. The idea of a "safe risk level" is just a more subtle way of saying "there's a chance of a crash, but we're doing everything we can to avoid it." In the "we're doing everything we can" part, the difference is whether a cryptocurrency is more or less reliable.
- Lower risk compared to other cryptocurrencies
- Lower volatility
- Potentially lower growth
When investing, you have to always be careful what you invest in. No blue-chip will "save" you from a market downturn. Most protocols and their tokens will drop by 99% in a bear market, if not to 0. This should not happen with blue-chip cryptocurrencies. They usually only drop by 80 to 90%.
The difference is that compared to other cryptocurrencies, blue-chips are able to rise again thanks to their community trust and continue to function after the market situation improves.