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Ethereum’s market cap outperformed GM, CME, and tech stocks. What’s next?

2020 was an impressive year for the Ethereum network and the price of Ether (ETH). In November, Eth2’s deposit agreement was entered into without anyone’s knowledge and by the end of the month the agreement had reached its target with 524,288 ethers blocked.

When Black Thursday took place on March 12th, the price of almost all cryptocurrencies was depressed, and Ether was not spared from the carnage. After trading for just $ 86 on March 12, ether rose to a 322% gain and the altcoin hit an annual high of $ 635.70 on December 1.

Despite the praise Bitcoin received for hitting a new all-time high earlier today, Ethereum’s price actually surpassed BTC in 2020.

Ether’s performance compared to Bitcoin’s (so far this year). Source: Digital Assets Data
Ethereum’s market cap outperformed GM, CME, and tech stocks. What’s next?
Ethereum’s market cap outperformed GM, CME, and tech stocks. What’s next?

Despite this outstanding achievement Ether is still around 59% below its 2018 all-time high of $ 1,431. Even if the price is well below its all-time high, The $ 67 billion market cap has overtaken automaker General Motors and CME Group.

It’s worth noting that these comparisons are controversial as public companies have assets, liabilities, investments, sales, and employees. While the same cannot be said for ether, traders will nonetheless compare the two.

Long-term investors tend to create multiple competitive scenarios, conduct growth analysis, and conduct multiple valuations. Meanwhile, Traders will mainly be concerned with price and volume.

Aside from the differences between the two assets and the drivers of their value, it should be noted that Some of the newer trading platforms offer both cryptocurrency and stock trading.

Mobile app based stock brokers like E * Trade, RobinHood and eToro have tens of millions of users Thanks to the easy access these platforms provide, it’s easier for a wide variety of investors to interact with digital assets.

How ether compares to companies with similar market capitalizations

Colgate-Palmolive is a member of the SP 500 Index and The company has a market capitalization of $ 73 billion. Founded in 1806, the company posted net income of $ 2.7 billion for the past 12 months.

US. Bancorp it also has a market capitalization of USD 67 billion, It is the fifth largest US bank and a member of the SP 500. The company was founded in 1968 and also owns Elevon, a credit card processor.

With a market capitalization of USD 64 billion, The CME Group that owns the Chicago Mercantil Exchange, Founded 172 years ago. Net income was $ 2.1 billion for the past 12 months, and the stocks are also included in the SP 500 index.

Although Ether has a similarly large market capitalization, it is not comparable to the companies mentioned above. Cryptocurrencies have no balance sheets or profit and loss accounts. Hence, ether behaves more like a commodity like gold, oil, and bitcoin. The chairman of the US Commodity Futures Trading Commission (CFTC) has also expressed a similar opinion.

ETH versus companies with similar market capitalization (in billion dollars). Source: TradingView

As we can clearly see in the graphic above, There are hardly any similarities between ethers and publicly traded companies. While these stocks trade an average of $ 283 million a day, the cryptocurrency tops $ 2 billion, according to Messari.

The same applies to the volatility of ether. the standard measure of daily price fluctuations. Cryptocurrencies tend to see much more abrupt movements, mainly because they don’t depend on sales or growth expectations.

90-day volatility of ETH, USB US, CME US, CL US. Source: TradingView

While The annual 90-day rate of Ether exceeds 80%, is 20% for Colgate-Palmolive and 32% for CME. Meanwhile, US. Bancorp has a volatility of 47% And while it’s unusually high for most stocks, it’s still a long way from the levels of cryptocurrencies.

Growing companies have done just as well as ethers

Not all companies are created equal, and some tech companies have competed on the bull cycle of ether. For example, Zillow was on the run with a market cap of $ 25 billion and Square with a market cap of $ 94 billion.

Ether (ETH) compared to Zillow (Z US) and Square (SQ US). Source: TradingView

Both Zillow and Square have doubled their revenues in the past two years. and each of them achieved enormous potential growth in their market share in their sector.

Unlike ethers, they bear the brunt of investing, marketing, and other growth problems. Even so, both companies were able to generate a profit of 220% over the past thirteen months.

Cryptocurrencies and stocks are becoming less and less of a comparison between apples and oranges

It is a relatively fruitless exercise to imagine the potential market for ethers. First, the penetration of the cryptocurrency is minimal, And recent studies show that only 7% of Americans have bought Bitcoin. So, The percentage of users who actually use the Ethereum ecosystem is much lower.

In contrast to listed companies Ether is part of open source software. Therefore upgrades and new system connections are possible. Although it is difficult to assess the development capacity of the network, Today’s launch of the Ethereum 2.0 Genesis block could be seen as an example as the price of Ether rallied impressively on the way to upgrade.

Finally, It’s fair to say that ether has greater potential than most publicly traded companies, but that doesn’t mean investors will stop valuing their market cap against growing tech companies.

The views and opinions expressed here are solely those of darer and do not necessarily reflect the views of Cointelegraph. Every investment and business move is associated with risks. You must do your own research when making a decision.

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