Bitcoin recently had its 10th anniversary and the last 10 years have birthed an alternate market of crypto assets. The last 10 years have also triggered polarizing debates about whether cryptocurrency is money or commodities.
On Wall Street, cryptocurrencies still generate mixed reactions. Some people believe that cryptocurrency is the future of money and that the token economy surrounding decentralized applications could potentially coexist with traditional Wall Street assets. In contrast, some people believe that cryptocurrencies are scams or at best, speculative bets for thrill-seeking traders and investors.
This piece compares the 5-year performance of FANG stocks – the grouping of major technology companies known as FANG (Facebook, Amazon, Netflix, and Google)- against the performance of Bitcoin over the same period to determine if Wall Street traders and investors are better off holding stocks or Bitcoin.
Bitcoin Vs FANG
The U.S. stock market has been enjoying bullish tailwinds in the last few years after the emergence of Donald Trump even though there are decent arguments for and against the correlations or causality of Washington and Wall Street. However, Bitcoin and the general cryptocurrency market hasn’t enjoyed any noticeable support from Washington in the same period. Nonetheless, the performance of Bitcoin relative to FANG stocks tells an interesting story between the emerging asset class and traditional Wall Street equities.
While the S&P 500 is traditionally considered the optimal representation of the U.S. stock market, FAANG stocks typically set the momentum and the direction of the market. In the last 5 years, FANG stocks have outperformed the S&P 500 as seen in the chart below. Facebook Inc (NASDAQ: FB). was up 160.1%, Amazon.com, Inc. (NASDAQ: AMZN) was up 454%, Netflix Inc. (NASDAQ: NFLX) was up 434%, and (Google) Alphabet Inc. (NASDAQ: GOOGL) was up 140.9%, In contrast, the S&P 500 (GSPC) only posted 51.85% gains in the same period.
FANG VS S&P 500– 5-Year Performance
However, when tracked against Bitcoin and the NYSE Bitcoin Index, the performance of FANG stocks has been largely underwhelming. In the last five years, Bitcoin has gained 3,620% and the NYSE Bitcoin Index (NYXBT) has gained 3,640% in the same period.
FANG VS Bitcoin – 5-Year Performance
Even in the year-to-date period, Bitcoin’s 131% gains have outperformed the 47%, 16.8%, 8%, and 26.5% gains of Facebook, Amazon, Netflix, and Google respectively.
FANG VS Bitcoin – YTD-Year Performance
Making Crypto Trading More Engaging For Retail Traders
Despite the superior performance of Bitcoin over equities, cryptocurrencies still meet with skepticism or outright disdain on Wall Street. One of the factors that could help cryptocurrencies get a foothold on Wall Street is the introduction of innovative solutions that simplify crypto trading.
New entrants such as Nominex are trying to provide a superb crypto trading experience to newcomers and experts through its robust platform and powerful trading tools. Nominex features 40+ crypto pairing for trade, instant deposits/withdrawals, advanced trading instruments, and low trading fees.
Nominex’s (soon to be launched) NMX token is used to power the exchange, fund daily giveaways, provide discounts and cashback on trading fees, and payouts in its referral programs similar to how Binance uses its BNB tokens to power the Binance exchange. Nominex uses a unique free token distribution model that rewards traders participating in the exchange on a first-come, first-serve basis. Nominex distributes the same fixed amount of NMX tokens every day to its users. However, the fact that it distributes a fixed number of tokens means that the share of the distributed tokens that each user receives will continue to decrease as more traders join to get a part of the token distribution.
Nominex also has an interesting referral program that allows participants to build their own full-scope business. Nominex Binary Affiliate Program is the first cryptocurrency exchange affiliate program ever through which participants can receive 4 types of different bonuses from an unlimited number of affiliate levels. The binary tree affiliate structure allows participants to only have two people on their first affiliate level to form left and right teams. The second level has 4 members, the third level has 8 members had the levels grow into infinity with a 2X multiplier.
Is Wall Street Sleeping At The Wheels?
Despite the performance of Bitcoin relative to equities and other traditional assets, Wall Street has largely ignored Bitcoin and the general cryptocurrency market. Interestingly, the Winklevoss Twins, Bitcoin billionaires and co-founders of crypto exchange Gemini think that Wall Street is making a huge mistake in underestimating the disruptive potential of cryptocurrencies.
In an August interview with CNN, they revealed that “We had to invest (in crypto)because we were afraid of missing out. We couldn’t miss out on this future”. They, however, noted that “Wall Street’s asleep at the wheel…” and institutional investors are missing out even though retail investors seem to be profiting from the predominantly bullish trend of the crypto market.
Interestingly, developments such as the controversial Libra project powered by Facebook and the rise of crypto derivatives suggest that institutional players already have crypto in their scopes and it is a matter of time before they start making their moves public.
Bitcoin is starting to mature as an asset class after its speculative hype seemed to have peaked in the 2017 bull run. 2018 saw the price of Bitcoin declining more than 70% but its 2019 recovery takes a more measured pace on the path to technical resilience. It is still somewhat difficult to draw accurate correlations between Bitcoin and stocks; yet, this non-correlation is the exact reason Bitcoin is a suitable macroeconomic hedge for traditional assets such as FANG stocks that are typically clustered and correlated with traditional indicators such as public sentiment, company performance, and earnings reports.
Critics will be quick to argue that comparing the performance of Bitcoin to the performance of FANG stocks is more like an apples-to-oranges comparison; such arguments would be valid. The point of tracking the performance of Bitcoin relative to FANG stocks is not to stir a debate about which is the best-performing asset. After all, cryptocurrencies do not have the same fundamentals as stocks.
Nonetheless, this analysis should be a launchpad for more conversations around the need to keep a diversified portfolio that has a fine blend of traditional assets such as stocks and emerging asset classes such as cryptocurrencies.