The size, liquidity and growth of the crypto markets are still in their infancy. Even all crypto activities taken together are insignificant compared to traditional assets.
Global stock markets many times larger than the crypto markets
Global equity markets continued their rally in 2019 – despite some correction concerns. Most stocks were up in 2019, with the rally fueled later in the year by the Fed’s lenient decision to provide growing liquidity. In just a week, equity markets grew ten times the market capitalization of the entire crypto market.
Traditional investments have evolved over centuries and reflect nominal prices in some of the largest economies in the world. Crypto assets, however, are still in a pricing mode against Fiat. There are no specific measures of value that can be tailored to Bitcoin (BTC) or other assets.
2020 will see the US stock exchanges with optimism
For the time being, forecasts for the US stock market see another year with profits, albeit subdued compared to last year’s profits. But data show that the US economy has fended off a recession – and this gives reason to hope that market optimism will continue.
BTC remains an asset with an uncertain relationship with the development of stocks or bonds. For now, only younger investors choose to invest part of their portfolio in crypto assets. BTC only got into mainstream trading via futures trading, but there are still reasons to stick to the actual physical coins.
Investing in crypto assets can lead to significantly higher profits compared to the stock market. Despite the meteoric surge in some technology stocks over the past decade, BTC remains the fastest growing asset class at over 65,000%. At the same time, equity investments through short-term movements are still better when it comes to personal financial security.
BTC has still not received gold’s reserve status, although the coin has gained legitimacy in the past decade. Central banks are now paying more attention to the potential of crypto assets despite their relatively small share in world finance.
The sheer size of the traditional financial market also speaks for growing BTC inflows in the future. Hyperbitcoinization indicates that the nominal value tied up in the financial industry makes extremely high BTC prices possible.