Stocks vs. Crypto: Which Is a Better Investment Strategy?

It has already been a decade since the creation of the first cryptocurrency and, surprisingly, financial markets have not fully assimilated this new type of investment yet. Skeptic investors have always stated that cryptocurrencies are far too volatile, and they speculated that they would disappear as quickly as they appeared. But if the recent years have taught us anything, it’s that despite their restless nature, virtual currencies are here to stay. 

However, just because they promise a generous ROI, this doesn’t necessarily mean that they are a better investment strategy than stocks. So, how should an investor approach this new market, especially if he lacks experience? If you are wondering how to invest your first $1,000, you need to have all the facts at hand. Stick with us, as we are about to debate the match of the decade: Stocks Vs. Crypto. The results will surely surprise you.

Which market can deliver a higher return of investment?

In the investment world, the promise of a high ROI will always come with higher risks. As we already mentioned, virtual currencies are extremely volatile, but it is precisely this characteristic that promises a great ROI. To understand what exactly we are dealing with, look at Bitcoins’ evolution in its peak years:

• 2011 – increased by 1500% 
• 2012 – increased by 299% 
• 2014 – increased by 5400 %
• 2015 – increased by 37% 
• 2016 – increased by 130% 
• 2017 – increased by 200%
• 2018 – dropped by 70%
• 2019 – increase by 85 %

While we can’t expect a growth like the one from 2014 any time soon, even the recent years have been fruitful for Bitcoin investors. If you would have invested in Bitcoin a year ago when it was down by 70%, by now you would have achieved a return on your investment of over 155%. However, to achieve this growth, you would have needed steel nerves as the crypto market has seen some dramatic ups and downs recently.

Stocks, on the other hand, are better suited for people with sensitive nerves, as they don’t fluctuate as often or as dramatically. Their average ROI is quite small compared to crypto, and in the best scenarios, they give back a ROI of about 5-15%. If we were to take the advice of Warren Buffett, a good investment strategy shouldn’t include too many transactions. Instead, a wise investor should focus on finding steady-growing stocks and keep them for as long as possible. 

If you compare these two markets, just in terms of ROI, it all comes down to your investment profile and your goals. Are you willing to take the risk to achieve quick growth, or do you prefer a slow but steady growth?

Which are the trends that matter?

2017 was the year when crypto reached the peak of its popularity, but it was followed by a very hectic 2018 which drove skeptic investors to predict further volatility and the implosion of the crypto market. However, despite these dire predictions, the crypto market is still standing, and financial experts predict that the dust has settled, and we can now count on a strong upward trend. The mere fact that the market survived these dramatic changes is proof that it is on its way to a much stable future, especially when it comes to the most popular virtual currencies: Bitcoin, Ethereum, Litecoin, Ripple and Monery. Nonetheless, with stability, we can also expect a decrease in ROI. We can safely assume that we won’t be seeing a virtual currency that replicates the growth of Bitcoin any time soon.

As far as stocks go, the FANG (Facebook, Amazon, Netflix, and Google) stocks seem to be the safest and most profitable investments now. In the last 5 years, all these stocks have performed amazingly with ROIs fluctuating between 148% (Google) and 1156% Netflix.

No matter how the market trends change, one thing is for sure: when it comes to stocks, you need a lot of knowledge and skill in order to recognize trends and capitalize your investment accordingly. The stock market is also more vulnerable to external factors like world events and government decisions. Cryptocurrencies, on the other hand, are linked to each and they are not affected by external factors, so it is a lot easier to recognize the trends and hold or sell accordingly. 

Which is the best choice for you?

As you can see, both types of investments have both advantages and disadvantages, and in the end, making the right choice depends on your goals and possibilities. If your nerves and your budget allow you to block your money in the darkest times of the crypto market and wait for the peaks, then crypto would be the best choice for you. Crypto is also better for beginners looking to make their first investments. On the other hand, if you prefer steadier growth, you should opt for stocks. Just keep in mind that you will have to always stay informed and do extensive research about new technologies and the evolution of different companies.