- Bitcoin is decentralized, censorship-resistant, and independent of any entity or government.
- According to an analyst at Ecoinmetrics, BTC may be closer to mega-cap tech stocks than most people realize.
- The analyst says that BTC’s returns are similar to those of large-cap stocks like Tesla and NVIDIA.
- One similarity between Bitcoin and big-cap tech stocks is how they all have varying, but also similar price volatility.
When Bitcoin was created, it was touted to the public as a means of exchange.
Bitcoin, fundamentally, is supposed to be something like digital gold. Something to pay for goods and services with, and a possible replacement for fiat (or government-issued money).
And why wouldn’t it have been?
Bitcoin is decentralized, censorship-resistant, and independent of any entity or government. This, precisely, is what makes it the “money of the free”.
However, can we make an argument for why BTC is the same as just any other stock out there?
Say, Tesla, Nvidia or even Microsoft.
An analyst, in a recent insight piece, seems to think so. In this article, we will be going through his thought process, as well as reasons why there may be no (or few) difference(s) between $AAPL (Apple’s stock) and $BTC.
Bitcoin Is Closer To $TSLA, $NVDA And Any Other Tech Stock Than You Think
According to an analyst at Ecoinmetrics, BTC may be closer to mega-cap tech stocks than most people realize.
Citing the amount of misinformation about Bitcoin that still lingers more than a decade after its launch, the analyst mentions that most people still think that Bitcoin trades like “penny stocks”.
The way penny stocks trade is that their potential gains are usually determined by sharp spikes in market volatility.
Because of this volatility, penny stocks can be risky to invest in due to their lack of liquidity – And this is how many people view BTC.
An overhyped, highly volatile game for gamblers.
However, the analyst says that BTC’s returns are similar to those of large-cap stocks like Tesla and NVIDIA, as illustrated below.
Make no mistake, this doesn’t mean that BTC is as stable as Apple or Berkshire Hathaway, but it does show that Bitcoin is not some unique outlier asset. Many other stocks are just as volatile and risky as Bitcoin.
The analyst went further to say that BTC has the potential to become a mainstream store of value. However, it will take time for this to happen.
US Debt Growth Outpaces Great Recession, Raising Concerns
The analyst in the blogpost, went further to mention the current US debt.
According to the report, US debt is now growing faster than it ever did during the Great Recession, raising concerns about possible consequences.
So far, the US debt is now touching $33 trillion and continues to grow by $18 billion per day.
For context, this growth rate is more than twice the growth rate at during the Great Recession.
This rapid debt growth is concerning because it could lead to several problems, like higher interest rates (there is currently an issue with the FED continuously increasing interest rates at a steady 25 basis points)
As the debt grows, the government will have to pay more interest on it, forcing it to increase interest rates and further slow economic growth.
Inflation is another issue. Inflation results when the government is forced to print more money to pay off its debts. The scarcity of money suffers as a result, followed by its value.
Bitcoin offers an escape from these harsh economic effects, just the same (or even better) as any stock ever could.
Here’s What We Think
Bitcoin, Tesla, and NVIDIA may seem like entirely different assets, but there are indeed some compelling arguments as to why they might be similar.
One similarity between Bitcoin and big-cap tech stocks is how they all have varying, but also similar price volatility.
These assets also depend in one way or another on speculation and hype for their price movement. They all have global appeal, and what’s more, they have also done much to attract institutional investors.
Overall, while the fact that Bitcoin and the rest of these assets are digital (to some degree) and can be traded on exchanges, there are still some key differences between them.
- Bitcoin is decentralized, and stocks are not
- Bitcoin is unregulated, while stocks are
In all, the idea that there are now similarities being drawn between Bitcoin and big-cap tech stocks only shows that decentralized/digital finance and traditional finance (like banks and brokers) are now finding some middle ground.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.