Crypto VS Stocks: Which is the Better Choice for Investment
May 3, 2022 (Investorideas.com Newswire) Stocks, the second biggest asset class in the world next to Forex, have for decades proven without doubt to be a profitable instrument for investing in the financial market. Cryptocurrencies, however, are the new kid on the block, giving investors multiple avenues to make a fortune in the financial market.
There have been many speculations by financial advisors about which asset class is the best for investment. As the new kid on the block, many institutional investment api are still trying to integrate it into their system. On the other hand, investment in stocks is often overlooked by the new generation because it requires a long-term model to make substantial profits.
This article will consider general concepts involved in determining investment opportunities to bring a final verdict to the argument 'Crypto VS Stocks'; with logical reasoning, we will determine which has the best investment opportunity. Granted that, all investment opportunities do not suit all investors. Perhaps this plays a huge role in why the argument has lingered for so long.
Cryptocurrencies like Bitcoin and Ethereum have been thriving for over a decade; perhaps it's safe to attribute some longevity to the Crypto space, thus considering them a viable investment. However, we can't conclude longevity alone. We've seen billion-dollar hedge funds go bankrupt because the managers couldn't cope with the cutthroat system of the financial markets.
At the same time, we need to acknowledge that many people have been able to generate wealth from the crypto space over the last decade. While for some, it was life-changing, for others, it was just another profit added to what's already in their portfolio. However, we should also point out that most crypto investors have been liquidated following extreme market crashes in the sector once every three years.
While the daily market volume of the crypto market sits around $105 billion, it's still relatively small compared to the volume being pulled daily by stocks. Although it's not to suggest that $105 billion doesn't boast a good record, the figures are still worlds apart from what's going on in the stock market.
At any rate, daily trade volume ultimately predicts liquidity, which suggests the nature of volatility. Thus it is expected to see wild fluctuations in prices in the crypto market, which is relatively higher than what's possible in stocks.
The stock market needs no introduction; it's been around for over twenty decades and seems the most preferred by hedge funds and veteran investors. With an average return of 10% per year, it's hard to see an investor that wouldn't favor a stock market investment opportunity. Stock market crashes don't seem to happen often, perhaps due to the large total market cap of approximately $93 trillion.
Even though many individuals continue to profit off the stock market, we can also acknowledge that there have been monumental losses from stock market crashes regardless of how infrequently these crashes occur. At the same time, we've always seen the market bounce faster after every crash, which is a theme supported by the average yearly 10% return of the S&P 500 index (the benchmark for global stock evaluation). While that may be true, the value of significant stock prices is often too high for small-time investors to secure large amounts at any given time.
At any rate, as the NASDAQ continues to pull an average daily volume of $200 million, it bodes well for investors who need a lot of liquidity to be confident about an asset.
The Stock Market has proven to be the safest option among these two over the years. However, that's not to negate an investor's possibilities by operating in the crypto market. In the end, it goes down to the nature of the investor.
While choosing crypto might offer the chance to make large profits over a short time because of its volatility and response to social media influence. The stock will require a longer-term view to maintain a sustainable equity curve. Cryptocurrencies remain relatively new; as such, the speculations from government regulations can severely affect price movements. For stocks, if government regulations ever hit them, the effect doesn't go further than the particular company owning the stock. Thus, other stock instruments can maintain their trend.
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