Emerging Markets
Where do Crypto Markets Stand Against Traditional Assets?
Christine Vasileva | Dec 30, 2019 | 06:00
The size, liquidity, and growth of crypto markets are still in its infancy. Even all crypto-related activity is still minimal in comparison to traditional assets.
Global Stock Markets Add More Than 3 Times the Total Value of Crypto Assets in a Week
Global stock markets continued to rally in 2019, despite some fears of a correction. Most stocks gained in 2019, with a rally toward the end of the year fueled by the lenient decision of Fed to provide growing liquidity. In just a week, stock markets grew by an amount 10 times higher compared to the market cap of the entire crypto market.
Global stock markets have gained another $700bn this week in thin trading on santa rally. All equities now worth $87.1tn, just $200bn shy of a fresh life-time high and equal to 100% of global GDP so stocks have entered bubble territory. pic.twitter.com/JgXmKPDWCN
— Holger Zschaepitz (@Schuldensuehner) December 29, 2019
Traditional assets have had centuries in the making, and map out the nominal prices in some of the biggest world economies. Crypto assets, on the other hand, are still in a price discovery mode against fiat. There are no certain measures of value that can be tailored to Bitcoin (BTC) or other assets.
2020 Arrives with Optimism for US Stock Markets
For now, the predictions for the US stock market see another year of gains, though tamer in comparison to the gains of the past year. But the data showing the US economy staved off the recession are raising hopes market optimism may continue.
BTC remains an asset with an uncertain relation to the movement of stocks or bonds. For now, only the youngest investor cohorts decide to dedicate some of their portfolios to crypto assets. BTC has entered mainstream trading only through futures trading, but there is still a case for holding onto actual physical coins.
Investing in crypto-assets can lead to much higher gains in comparison to the stock market. Despite the meteoric rise of some tech stocks in the past decade, BTC remains the fastest-moving asset class, gaining above 65,000%. At the same time, short-term moves mean stock investments are still better when it comes to personal financial security.
BTC still has not received the reserve status of gold, though in the past decade, the coin gained legitimacy. Central banks now pay more attention to the potential of crypto assets, despite their relatively small share of global finance.
Just a reminder, the US holds 8000 Tonnes of gold. What happens when the Fed buys #BTC? https://t.co/HTxygC512c
— Howard Wetsman MD (@addictiondocMD) December 28, 2019
The sheer size of the traditional finance market also makes a case for growing BTC inflows in the future. Hyperbitcoinization suggests that the nominal value locked in the finance industry can make extremely high BTC prices a possibility.
What do you think about stock performance and the chances for crypto markets? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter: @Schuldensuehner, @addictiondocMD
