Crypto vs. Stocks: What should you invest in?
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Crypto vs. Stocks: What should you invest in?
Investing Basics
12/10/2022 10:47 AM

Crypto vs. Stocks: What should you invest in?

Although investors have always had many choices of financial instruments, the crypto bubble of 2017 has given them one more. If you’ve been asking yourself: should I put my money in cryptocurrencies instead of traditional stock options, this article is for you. While the answer to this question may not be straightforward, we help you explore the pros and cons of both options to help you decide.

Key takeaways

  • Stocks are considered to be more stable and less volatile than cryptocurrencies. This is because they are based on the company's earnings and not subject to as much speculation.
  • Cryptocurrencies, on the other hand, have the unique benefit of being decentralized, which means they are not subject to government interference or manipulation. 
  • Stocks have been the go-to choice of investors for most of the 20th and the 21st centuries. And even though cryptocurrencies are riskier in comparison, they do offer the chance of earning high rewards.

Crypto vs. Stocks: Understanding the Fundamentals

Yes, crypto, as with any other asset, is subject to the laws of supply and demand. However, there are some key differences between cryptocurrencies and stocks that need to be taken into account when making an investment decision.

For starters, crypto is a much more volatile asset than stocks. This means that when the market is having a good day, cryptocurrencies do help individuals earn more rewards. But they also tend to fluctuate quite a bit in a relatively short period of time. 

Cryptocurrencies present an excellent opportunity for those who are willing to take on more risk. After all, with greater risk comes the potential for greater rewards.

Another key difference between stocks and crypto is that the latter is not yet regulated by governments. This means that there is a higher degree of uncertainty when it comes to investing in cryptocurrencies. However, this also presents an opportunity for early investors to get in on the first floor of a new and exciting asset class.

As of 2022, there are nearly 10,000 different cryptocurrencies with a total market capitalization of over $2 trillion. In contrast, there are only about 6,000 publicly traded companies in the US stock market (NASDAQ and NYSE), with a total market cap of around $30 trillion. 

There are countless stocks to choose from when it comes to investing in the stock market. With so many different companies and industries to choose from, it can be hard to know where to put your money. Similarly, when it comes to cryptocurrencies, from major coins to altcoins, there are plenty of options to choose from. And, with so many different coins available, it can be difficult to know which ones are worth investing in.

This is where our automated trading app, BOTS, comes into the picture. The BOTS app offers investors over 300 automated bots that trade on your behalf. You can start by depositing as low as  €5, making it easier for you to get started. Check out how the BOTS app works.

Crypto vs. Stocks: Differences in valuation

There are a few key things to remember when it comes to valuation.

The first is that stock prices are based on the company's earnings. This makes stocks less volatile than cryptocurrencies. However, this also means that stocks tend to grow slower than crypto.

Another thing to consider is that crypto is still a new and emerging asset class. This means that it is subject to a lot of speculation and hype. 

As such, the prices of cryptocurrencies can be heavily influenced by news and media coverage. This can lead to price swings unrelated to the asset's underlying fundamentals.

Finally, it's important to remember that stocks are much more established than crypto. This means that there is a lot more data available when it comes to making investment decisions. 

This data can be used to make informed decisions about which stocks to buy or sell. In contrast, there is still relatively less data available regarding cryptocurrencies. 

Whitepapers and websites can provide some insights, but it is often difficult to find reliable information about a particular coin. 

More thorough research is required when investing in these coins. You need to check how the team is developing the technology, what the community support looks like, and whether there are any red flags that could signal a scam.

Pros of investing in cryptocurrency

1. Potentially high returns: Cryptocurrencies have the potential to generate higher returns than stocks. This is due to their high degree of volatility and speculative nature.

2. Accessibility: Anyone with an internet connection can invest in cryptocurrencies. You don't need a broker or bank account.

3. Decentralization: Cryptocurrencies are decentralized, which means they are not subject to government interference or manipulation.

4. Low barriers to entry: You can start investing in cryptocurrencies with a relatively small amount of money.

5. Anonymity: Cryptocurrencies offer a degree of anonymity that is impossible with traditional investments.

Cons of investing in crypto

1. Volatility: The prices of cryptocurrencies are highly volatile, which means they can fluctuate in a short period of time. This makes them a risky investment.

2. Lack of data: There is still relatively little data available regarding cryptocurrencies, making it difficult to make informed investment decisions.

3. Scams: Some scams are associated with cryptocurrencies, so you must be careful when choosing which coins to invest in.

4. Hacking: Even though exchanges are constantly working on upgrading their security systems, crypto exchanges have been hacked in the past.

Pros of investing in stocks

1. Stability: Stocks are generally more stable than cryptocurrencies. This is because they are based on the company's earnings and not subject to as much speculation.

2. Accessibility: You can invest in stocks through a broker or bank account. You don't need an internet connection.

3. Regulation: Governments regulate stocks, adding another layer of security.

4. Data: There is a lot of data available regarding stocks, making it easier to make informed investment decisions.

5. Diversification: Stocks offer the opportunity to diversify your investment portfolio.

Cons of investing in stocks

1. Slow growth: Stocks tend to grow slower than cryptocurrencies. This is because they are based on the company's earnings and not subject to as much speculation.

2. Commission fees: You may have to pay commission fees when you buy or sell stocks.

3. Minimum investment: You may need a minimum investment to open a brokerage account.

4. Geographical restrictions: You may not be able to invest in particular stocks if you don't live in the country where the company is based.

Stocks vs crypto trading

NASDAQ and the New York Stock Exchange are two of the most popular exchanges for stocks. They offer a wide range of stocks from different companies and industries.  For you to trade stocks, you need to have a broker account and find a reliable exchange. 

In contrast, there are many different exchanges for cryptocurrencies. These exchanges offer a wide range of other coins to trade. To trade crypto, you need to create an account on one of these exchanges and deposit money into it. 

Both share the same basic principles. For example, you buy an asset at a low price and sell it when the price goes up. 

As is with any investments, you need to have a clear understanding of what you are buying, as well as the risks involved. And if you are a beginner and want to ease into the world of investments, there are certain technological advancements that you might want to take into consideration. For instance, you can try the BOTS app

Stocks or Crypto?

So, what should you invest in – crypto or stocks? The answer to this question depends on your investment goals and risk tolerance. 

Stocks are a good option if you're looking for stability and slow growth. However, if you're willing to take on more risk in exchange for the potential of higher returns, then investing in cryptocurrencies may be a better option.


This blog is for educational purposes only. The information we offer does not constitute investment advice. Please always do your own research before investing. Any views expressed in this blog and by BOTS do not constitute a recommendation that any particular cryptocurrency (or cryptocurrency token/asset/index), portfolio of cryptocurrencies, transaction, or investment strategy is suitable for any specific person.

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