Bitcoin vs. XRP: A Confrontation for Survival When the Market Crashes – Who Will Stand?

Bitcoin and XRP may be safer than some crypto assets, but not that they are sure when things fall apart. When the Nasdaq Composite and S&P 500 entered correction territory, investors began to worry more about the possibility of a market crash. And some are considering which of these two asset classes will survive a market crash and which one is worth buying afterwards. To begin, let's take a look at the performance of Bitcoin and XRP during the coronavirus market crash in early 2020.

As you can see, both assets plummeted during the crisis, along with the rest of the market, which is normal. Then, over the next five years, both increased.

As you can see, both assets plummeted during the Bitcoin crash has performed slightly better since the 2020 crash, and its price is generally less volatile than XRP's. This is not an advantage, except for those who want to sleep better without worrying about the value of their investment. Along with the rest of the market, this is normal. Then, over the next five years, both increased. But what happens when the next market crashes? XRP is a cryptocurrency whose value derives its utility as a medium of exchange rather than a store of value. For it to be valuable as a medium of exchange, it needs to be actively requested by users, who then have to transfer money to each other, and who must also have a reason to need more in the future. Since its users are financial institutions that want to avoid incurring currency conversion fees and international remittance fees, the health and level of operations of those financial institutions is a major consideration for future demand for XRP. Market crashes often coincide with periods of great instability, especially economic and financial instability. Financial institutions, like most businesses, do not want to make big investments or play big strategies during such periods. And, on average, that means there's a high chance that they won't need to make as many international money transfers. So, investors will likely assume that demand levels for XRP will be lower when uncertainty is at its highest. Bitcoin, on the other hand, doesn't have much value derived from its utility. Although it can be a medium of exchange, most investors consider it a store of value. That makes sense considering its supply dynamics, ensuring that there is an ever-smaller amount of Bitcoin produced over time, creating scarcity. Scarcity doesn't necessarily create demand, but it does ensure that prices will continue to rise over time as long as there is still demand. Investors may be inclined to liquidate some of their stores of value during turbulent times so that they have enough fiat money on hand to cover uncertainties, but smart Bitcoin holders understand that doing so is a compromise, Since the likelihood of this coin being more valuable in the long term is quite high thanks to its increasing scarcity. Therefore, the likelihood that holders who sell coins will become buyers again is also very high, possibly even before the market decides that the hard times are over. There is only one real choice No one knows when the next market crash will happen, but Bitcoin seems like a better choice for a market crash. It is conceivable that the circumstances of a crash are events that create a high probability of a global or localized recession, which can last years. Under those conditions, Bitcoin is unlikely to thrive. However, XRP will almost certainly suffer more, as the very thing that makes it valuable, its usefulness, is simply no longer attractive, as users will cut back on investing in new financial technologies rather than digging into them. Moreover, Bitcoin's supply momentum will continue to increase regardless of whether there is a lot of demand or not. That means that when demand eventually returns, new buyers will compete intensely, pushing up prices. XRP doesn't have any similar mechanisms, even if it's a good coin to buy in general.