How are cryptocurrency markets and Stock markets Different
January 31, 2018 7:17 am,
We have heard a lot about the Cryptocurrency market which is in the trend, and we keep a-wondering how it is different from the normal money market. Everyone wants to invest in some form or the other, earlier before the virtual world introduced the concept of cryptocurrencies, people were head over heels for equity and shares. Now, the investors have more exposure and ideas where they can put their money.
Both the cryptocurrency market and stock market run on the simple ideal of the demand and supply theorem. The prices are determined by demand and how much people are willing to pay for the share of any company. In the case of equity markets, you actually get hold of a share and know how much the total market capitalization is but this is different from the crypto market. In the crypto market, a person invests in the technology or the currency in the manner they want to see it, but they never really get to be a part of the ownership of the company. The stock market allows a person to trade securities, but the cryptocurrency market is much wider and includes both currencies and assets.
The cryptocurrency market is much much younger than the ideal stock market. In the crypto market, new competitors can enter very easily which brings down the life mortality of the old currencies. The old currencies die much faster than the old businesses die in the stock market. There are higher risks of security in the cryptocurrency market because everything is virtual here. Nobody really knows what is happening behind the screens and how everything is being dealt. Yes, it may seem easy but is it really that secure? Hacking and phishing is one of the main threats and the loss of data goes side by side along with it.
Now to speak in numbers and data, equity markets globally continue to outperform the cryptocurrency market. Hang Seng Index, one of the top equity market set up in Hong Kong is advancing 2.8%. In the case of equity, Ethereum (ETH) is 1.4% higher than what it was in the previous week. Overall, the whole cryptocurrency market remains with lower vitality and therefore, its price is less predictable.