As a financial tool, Bitcoin has no competitor, but as an asset class, it has many. The obvious one is gold[1], but the more modern-day equivalent is the asset class of technology stocks.
From the lows of the March 2020 financial crash, few assets have recouped their losses. While Bitcoin[2] is up by nearly 200 percent, tech-stocks have also seen bullish swings. The Nasdaq Composite is up by 56 percent, Facebook by 77 percent, Amazon by 95 percent, Apple by 112 percent (it had a stock split in August 2020), Netflix by 77 percent, and Alphabet by 48 percent. These were the big winners of the crash, but undoubtedly Bitcoin saw bigger gains. And yet, there isn’t more hype around investing in the cryptocurrency.
While institutional investors like MicroStrategy, Square, and Paul Tudor Jones have turned bullish on the digital asset, retail investors are still wary and are opting for lower performing (but valuable nonetheless) tech stocks. Why?
In an interview with AMBCrypto, Nick from Ecoinmetrics gave three reasons for this outperformance of tech stocks against Bitcoin on the retail front.
Passivity
Owing to the massive capitalization of the aforementioned companies, tech stocks see higher “passive flow,” said Nick. What he meant by this was because companies like Apple, Alphabet, Netflix, Facebook, Amazon, and Microsoft take the top spots on the S&P500, they receive investment through various index and large-cap funds. He said,
“The FAANG are already a huge part of the indices that are used for passive investing. Take Apple alone, it is about 6.5% of the whole SP500…That in turn is pushing their market price higher.”
Apple, Microsoft, Amazon, Facebook, and Alphabet take the top 5 spots on the S&P500[4], with a combined weightage of
