Crypto vs. Stocks: Is Ethereum the Nvidia of the Digital Asset World?

Five years since the rise of the “Magnificent Seven” tech stocks, a comparison with major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) offers a fascinating glimpse into market dynamics. Consolidation has significantly benefited companies like Apple, Microsoft, Alphabet, Meta, Amazon, Nvidia, and Tesla.

Bank of America analyst Michael Hartnett coined the term “Magnificent Seven” in April 2023. At that time, these stocks accounted for 88% of year-to-date shareholder returns. Despite Tesla’s recent decline, the Magnificent Seven continues to outperform the broader market.

The Roundhill Magnificent Seven ETF (MAGS) has returned 35.8% year-to-date, compared to the S&P 500’s (SPX) 15.1% return over the same period. This outsized performance means these stocks now represent nearly 30% of the S&P 500, highlighting the concentrated nature of the U.S. tech stock market.

In contrast, blockchain networks like Bitcoin and Ethereum offer a different growth story. Cryptocurrencies generally operate without earnings, unlike the tech giants. Comparing the Magnificent Seven with Bitcoin and/or Ethereum reveals mixed performance outcomes.

Nvidia and Tesla emerged as clear winners, with their valuations expanding by 2,782.8% and 1,102.2%, respectively, over five years. Meanwhile, Amazon and Meta experienced slower growth.

Combined, the Magnificent Seven companies now boast a market capitalization of $15.770 trillion, a 262.5% increase from $4.35 trillion five years ago. Notably, Nvidia outperformed both Ethereum and Bitcoin over this period.

Nvidia’s market cap surged from $105.42 billion to $3.039 trillion, a 2,782.8% increase. As of June 28, 2024, Bitcoin and Ethereum accounted for 66.9% of the total crypto market cap of $2.46 trillion, with Bitcoin at $1.25 trillion and Ethereum at $421 billion.

Ethereum’s market cap grew from $18.16 billion to $368.3 billion, a 1,880% increase, while Bitcoin’s market cap increased by 1,109% from $103.98 billion to $1.257 trillion. However, due to its lower initial market cap and later launch, Ethereum outperformed Bitcoin by 1.7 times.

Compared to the Magnificent Seven, Ethereum’s market cap growth aligns with Nvidia’s at 2,218.3% versus 2,782.8%, while Bitcoin’s performance is closer to Tesla’s at 1,102.2% versus 1,340.8%.

The SEC’s in-principle approval of Ethereum ETFs on May 23, 2024, marked a significant development. As of June 28, 2024, the combined market caps of the Magnificent Seven, Bitcoin, and Ethereum totaled $17.44 trillion, with Bitcoin and Ethereum comprising 9.6%.

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