Stock Market

Cryptocurrency vs Stock Market, more like Gamble vs Safe bet

Created on 14 Jul 2022

Wraps up in 5 Min

Read by 1.1k people

Updated on 10 Sep 2022

Between 1960 and 2019, 147 countries have defaulted on government bonds, often considered to be a totally risk-free investment. What was the topic again?

Warren Buffett, a veteran investor, quotes that one must never depend on a single source of income and must invest in multiple avenues to create a second source. With the pandemic, the financial uncertainties led to a boom in investing culture. Mid-aged individuals and veteran investors used to dominate this space.

However, due to the pandemic, millennial and beginner investors aged 20 to 30 flooded into the trading and investing sector.

It has become one of the most popular sources of income due to easy-to-use trading tools and a wide range of information available over the internet. A report by SEBI claims that the brokerage industry opened more than 1 crore new accounts in India, in 2021 alone. 

Stock markets, especially in sectors like technology and health, boomed despite labour issues globally. Another reason for this sudden influx was the high returns from the comfort of your own home.

Now, the world is witnessing another trading culture, virtual currency or cryptocurrencies. As per a survey, 1 out of the 10 people invests in cryptos. Like the stock market, crypto trading offers ease of trade and an opportunity for short-term high growth.

The question we will attempt to answer here is which is better: The stock market or cryptocurrency?

Cryptocurrency vs stock market, is what we are going to talk about today!

Cryptocurrency Vs Stock Market: Are they different?

Both the markets offer trading opportunities to investors. However, both are different in a lot of ways. Cryptocurrencies trade in cryptos, which are digital and virtual currencies. Ethereum, Bitcoin, Litecoin, and Tether are some types of cryptocurrencies.

To trade in cryptos, you need to follow these steps :

  • Create an account on a crypto exchange.

  • Research and build your strategies.

  • Deposit the money you want to invest.

  • Buy the cryptos.

  • Store them in the wallet.

Stock markets trade in stocks, which represent ownership of the company. Alternatively known as shares, the corporations issue them to raise funds.

Suppose, if you want to invest in Tata, you can buy its stocks on the stock market. Depending on the risk and returns, equities, debt instruments, and money market instruments are different types of investments in the stock market.

Follow these steps to trade in stocks:

Cryptocurrency and the stock market also differ in volatility, regulations, fees, and more. We will discuss those in the following paragraphs. 

Crypto vs Stock Market: Which is more volatile?

When we talk about crypto vs stock market, we must understand the risks. One common question that investors ask is, “Is crypto riskier than stocks?”. To answer, let's first understand the meaning of volatility. 

Volatility means sudden price movements in the stocks, whether rise or fall, due to market or unpredictable events. George Soros, the man famously known for breaking the Bank of England during the UK currency crisis, once said that volatility is greatest at a turning point and diminishes as a new trend is established. 

Cryptocurrencies are relatively new players or trends in the trading market. Further, they are decentralised with no regulating authority. Hence, they are a more volatile, risky investment. 

For example, the price of certain cryptocurrencies like Dogecoin and Bitcoin is greatly influenced by Elon Musk, whether it is his tweets or announcement of his crypto investment. In 2021, his firm, Tesla, bought $1.5 billion of Bitcoin, which led to a 17% spike in Bitcoin price.

Although, the high volatility makes it a better investment to earn quick profits when analysing between day trading crypto vs stocks. However, the investor must have a strong crypto understanding and a sound financial strategy. In addition, there is a cap on the supply of some cryptos. The demand and supply determine its market value. 

On the other hand, stock market investments are established trading and investing practices. So, large volumes of trade happen in the stock market, which makes them little resistant to trade movements. Also, how the company performs also determines the stock market value.

However, the stock markets are also prone to political and economic conditions. In addition, the stock exchange is regulated by the Reserve Bank of India and the Securities and Exchange Commission. Thus, safe to say, it is more stable compared to cryptocurrencies. 

According to research, Bitcoin requires 121.36 terawatt-hours of energy annually, almost equal to the electricity consumed by Argentina and Norway.


Elon Musk, the CEO of Tesla, broadcasted that Tesla will no longer accept Bitcoin as a payment. Musk decided to ditch crypto as a payment option since he wanted a payment option with sustainable energy use. However, he received a lot of hate for this decision.

A Twitter user speculated that Elon Musk would ditch Bitcoin over the hate he received on Tesla not accepting crypto as payment. To that, Elon Musk replied with one word, “Indeed”. This one vague word led to a plunge in Bitcoin prices by 8.5%. 

What should you consider before deciding on investing between cryptos and the stock market?

Apart from volatility and risk, here are a few things an investor needs to consider: 

1. Fees and costs 

2. Stock markets are heavily regulated. Hence, brokers need to ensure proper account management and transparency in transactions. Thus, they charge multiple costs from account management fees, advisory fees, transaction charges, custodian fees, and more. 

3. On the other hand, cryptocurrencies have lower costs. Some of these are maker and taker fees, exchange fees, mining and redemption fees. 

4. Trading days and Timings.

5. Trades on the stock market trading can only happen during business hours. Like in India, the trading times are between 9:15 AM to 3:30 PM. Furthermore, trading does not happen on Saturdays, Sundays, and scheduled national holidays. 

6. In contrast, the crypto market is never closed. There are no holidays and no specific hours of trade. You can trade anytime you want. 

Conclusion

The above article gives a detailed comparison of cryptocurrencies vs the stock market. Both have their pros and cons. A successful investor is the one who reviews his financials, researches the market and stocks, and then invests. Also, one must possess discipline and patience.

As Benjamin Graham, author of The Intelligent Investor, says: 
“In the short run, the market is a voting machine and in the long run it is a weighing machine”. 

To make your investing journey a little easier, we suggest you check out our stock recommendations which are very carefully analysed by our research analysts in Recipe by Finology. 

Whether it is a stock recommendation, investing lessons, opening a Demat Account, stock analysis and reviewing finances, they help to build a personalised financial recipe for each investor. Start your financial journey now. 

An Article By -

Rishika Mukherjee

252 Posts

12.6m Views

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Mukherjee is an avid reader and loves to write as much as read. She is the youngest of all but handles chores like a 50-year-old woman. She takes a lot on her plate and somehow, eerily manages to get the job done. As Hazel Grace stated, she could read a good author's grocery list, and so would Miss Mukherjee. 

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