Panic, Fears and Doubts Hangs Over Cryptocurrencies; Are Equities Any Better?

The loss of market value for cryptocurrencies during this past week to April 3, 2018 was a reminder of the panic mode that has hit the market since December 2017.

Cryptocurrencies plunged to the lowest in about 60 days with Bitcoin trading at $6,549 on 2 April 2018, and Ethereum at $383. For many people and the armchair critics, it is the indication that cryptos were headed for a free fall. Despite the gloom, the resilience of cryptos is not in doubt with Bitcoin climbing beyond the $7,300 mark for morning trades of April 3, 2018.

Are Equities Any Better?

Critics who lash out at cryptocurrencies fail to point out that daily across the globe; investors lose their money when blue chips fail. Many companies in the stock exchange fail without the uproar that attends the drop in market price of cryptos.

Equities soar when there is a favorable report on quarterly, half-yearly or yearly financial performance. The same happens if there are reports that indicate an increasing market share or a possible boost in demand like a surge in consumer purchasing power.

Equities fluctuate in market price over the course of the year, with exposure to pseudo-market and extra-market forces globally. In the crypto world, there are a variety of factors that dampen the rise in market prices.

How Has Equities Performed

S& P equities presently post an average of 10 percent returns while the stock market trudges behind at a paltry 7 percent. This sorry state of affairs has not stopped market promoters from making it seem like the blue chips provide a 100 percent return.

The American economy was strong throughout 2017, and this indicated that there will be a boost in the purchasing power across the country for some time. In some ways, the sentiments of a stronger economy have extended into the year 2018.

The specter of a stronger world economy is indicative of the World Bank forecast for 2018, and this has not led to a bumper performance for equities in Q1 2018. S&P lost 2.7 percent in March 2018, and NASDAQ lost 2.9 percent.

Cryptocurrency Losses for March 2018

The beating taken by cryptocurrencies for the quarter to March 2018 is traceable to non-intrinsic factors. The declarations by Chinese, Japanese and Indian governments have weighed in at one time or the other. South Korea also outlawed new accounts for non nationals and required a full KYC compliance from exchanges.

Bitcoin for example has not become cheaper to come by neither has Ethereum. The mining processes remain the same to date, except for algorithm modifications geared at improvement of processes.

Comparing Cryptocurrencies and Equities

Bitcoin opened the month of March 2018 at $10,977 and closed at $7,431 in morning trades of April 3, 2018.In effect, Bitcoin lost 32 percent of its market value over the course of the last 31 days.

The S& P Index lost about 5 percent of its value over the same period, which is considerably better in terms of sustained market value.

However, in comparing portfolios, returns and prospects are particularly important. In this regard, while a surge in Bitcoin price can lead to more 100 percent return in 30 days, equities do not have such prospects.

Going Forward

In view of the prospect of returns, it is evident that cryptocurrencies present a far more robust outlook than equities. Anyone who prefers less volatile markets should be aware that higher market returns are linked to higher risk.

Moreover, to limit exposure to price volatility, cryptocurrency traders are advised to ‘hodl’ or let the price crash pass by before selling to minimize losses. After all, from all indications, with increasing attempt at regulation, cryptocurrencies are here to stay.