Remember the question is about the value of these assets and not the volume of social media posts about them. 

Answer: Value of S&P 500 companies is 40X larger than cryptocurrencies ($33.5 trillion vs. $0.8 trillion), as of 11/15/2022. In fact, one company, Apple, with a market cap of $2.4 billion has 3X the market value of all cryptocurrencies. While crypto may be grabbing the headlines it's value pales in comparison to large companies. 

Questions: 

• Why do you think that most people assume that cryptocurrencies have more value when compared to stocks?
• What do you think is a riskier investment: investing in a fund that owns the 500 largest companies or in a basket of cryptocurrencies?

Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (from Coin Market Cap)

While owning the S&P 500 is a bet on the future of the American stock markets and economy, owning Bitcoin is a bet on the future of cryptocurrency as a whole. People still seem to forget that for your alts to go up, Bitcoin must go up as well. In that sense, Bitcoin’s performance can be seen as an overall index of crypto.
Another major difference in my opinion lies in the nature of the asset. As discussed, the S&P is a basket of over 500 long-standing companies that have stood the test of time. These companies generate revenue and create real-world value. The intrinsic value of the S&P is therefore quite easily measurable using various revenue, cash-flow, or profit-based models.

With Bitcoin, its value is far more speculative. Although both the S&P and Bitcoin are valued by the market (by means of demand and supply), there are no revenue streams, dividend payments or annual reports to gauge the potential value of bitcoin. This lack of “data” is part of the reason why I personally consider Bitcoin to be much closer to a commodity than a stock index.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

More posts by Tim