BTC and ETH market capitalization VS the seven giants of US stocks: Who is the winner?

Author: Shane Neagle, Coingecko; Translator: Tao Zhu, Golden Finance

The Big Seven stock phenomenon is the result of consolidation. When a company monopolizes a particular market space, it gains enough momentum to continue growing and swallow up startups that may threaten it later. In addition, these companies tend to scale their products more efficiently, further consolidating their market position.

This process happened to Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), Amazon (AMZN), Nvidia (NVDA) and Tesla (TSLA). Bank of America analyst Michael Hartnett called them the "Big Seven" in April 2023. At that time, these stocks contributed 88% of the returns to shareholders.

Even though Tesla is losing its lead, the Big Seven are still outperforming the broader market. The Roundhill Magnificent Seven ETF (MAGS) has returned 35.8% year to date, while the broader benchmark S&P 500 (SPX) has returned 15.1% over the same period.

With their outsized market performance, the Big Seven stocks (comprising about 30% of the S&P 500) represent a concentrated market for U.S. tech stocks. So how do they compare to the other technology that doesn’t have a yield: blockchain networks?

Specifically, how do the Big Seven stocks compare to Bitcoin (BTC), which represents proof of work, and Ethereum (ETH), which represents proof of stake?

Have cryptocurrencies outperformed the Big Seven?

Cryptocurrencies have outperformed most of the Big Seven stocks, but they also had significantly lower market capitalizations in 2019 compared to stocks. How are the Big Seven, Bitcoin, and Ethereum performing?

Sort by market capitalization weight, the ranking within five years (from May 7, 2019 to June 28, 2024) is as follows:

In terms of valuation growth rate, Nvidia and Tesla are obvious winners, growing by 2,782.8% and 1,102.2% respectively. Amazon and Meta were the slowest growers.

The two companies have a combined market cap of $15.770 trillion, up 262.5% from $4.35 trillion five years ago.

Nvidia outperformed Bitcoin and Ethereum over the past five years

Nvidia is the only stock among the Big Seven that has outperformed Ethereum and Bitcoin over the five-year period. Its market cap grew from $105.42 billion to $3.039 trillion, up 2,782.8% during that period. As of June 28, 2024, Bitcoin and Ethereum account for 66.9% of the total cryptocurrency market capitalization of $2.46 trillion, at $1.25 trillion (49.9%) and $421 billion (17.0%), respectively.

In the past five years, from May 8, 2019 to June 28, 2024, the market value of Ethereum (ETH) increased from US$18.16 billion to US$368.3 billion, with a market value increase of 1,880%.

Over the past five years, from May 8, 2019 to June 28, 2024, the market capitalization of Bitcoin (BTC) has increased nearly 6 times from $103.98 billion to $1,257.16 billion, a market capitalization increase of 1,109%.

In other words, considering that Ethereum was launched six and a half years after Bitcoin, Ethereum has outperformed Bitcoin by 1.7 times. Therefore, Ethereum’s growth benchmark is a lower market cap. Compared to the Big Seven stocks:

• Ethereum’s market cap performance is in line with Nvidia’s at 2,218.3% and 2,782.8%, respectively.

• Bitcoin’s market cap performance is in line with Tesla’s at 1,102.2% and 1,340.8%, respectively.

How do the Big Seven’s market caps compare to Bitcoin and Ethereum?

To the surprise of many, the U.S. Securities and Exchange Commission (SEC) reversed its stance on an Ethereum ETF. As of May 23, 2024, the market regulator approved three exchanges to list and spot trade Ethereum funds. There are a total of eight Ethereum ETFs listed on NYSE Arca, Nasdaq, and CBOE BZA.

Taking this new development into account, the comparative market capitalization of all the Big Seven, excluding Bitcoin and Ethereum, as of June 28, 2024, is shown below.

Taking into account the growth over the past five years, Nvidia and Ethereum have achieved the highest comparable market capitalization growth since May 2019, at 2,782.8% and 2,218.3%, respectively.

Together, they hold $17.44 trillion in value, of which Bitcoin and Ethereum account for 9.6%.

Differentiation of Bitcoin and Ethereum’s Market Capitalization

As can be seen in the above chart, the ups and downs of Bitcoin and Ethereum coincide with bullish and suppressive events.

• PayPal announced crypto integration in October 2020.

• Elon Musk’s abandonment of BTC payments for Tesla was a major suppressive event.

• The Terra (LUNC) crash in May 2022 ended the bull run.

• The Fed started raising interest rates in March 2022, maintaining the suppressive momentum.

• After several bankruptcies such as BlockFi and Celsius, 2022 ended with the collapse of FTX, the third largest cryptocurrency exchange by trading volume, in November.

• BTC and ETH began to recover from the US regional banking crisis in March 2023.

However, Bitcoin and Ethereum’s growth diverged more after the SEC approved 11 Bitcoin ETFs on January 11, 2024. From this milestone of institutional adoption, Bitcoin’s market cap increased by 50% from $838.38 billion to $1.25 trillion.

During the same period, Ethereum’s market cap increased by 50% from $281.14 billion to $421 billion. This is not surprising, as Ethereum is about to launch its own ETF lineup. However, Ethereum’s market cap is much smaller than Bitcoin’s, so one might expect it to perform better.