Figure 5 shows that the FANG+ Index has gained about 10% YTD, while the prices of Bitcoin and the total crypto market cap have a triple-digit growth in the same period. Still, the magnitude of FAANG remained significantly larger than the whole crypto space, so from this perspective, apparently, tech stocks are more bubble-liked than crypto overall.
Figure 5: Returns of FANG+ Index vs. Total Crypto Market Cap vs. BTCUSD (YTD)
Figure 6: FANG+ Index vs. Bitcoin (YTD)
Decentralized at Heart
As we discussed, the social element is one of the most crucial parts of many tech companies. In cases like Facebook, it’s the major operating business of the firm. However, in some cases, the way tech companies run their social platforms is a business model of decentralization.
Take Facebook, for example. Facebook users are not customers of the social platform. They are the products. From the company’s perspective, Facebook is a decentralized platform that owns a diversified source of content, so that the firm does not have to rely on a single source of content and can, therefore, reduce risks.
Bitcoin, in a certain way, works the same. Bitcoin is a decentralized platform for payments and store of value, and the value of Bitcoin is very largely determined by its users. So, on that front, Bitcoin and social media seem to share the same underlying value.
We’ve reviewed the challenges that major tech companies are facing, such as regulatory issues and changes in consumer habits. Valuation-wise, FAANG seems to remain at a relatively high level and its sustainability remains in question. However, Bitcoin could provide a better alternative for growth-seeking investors as its decentralized nature appears to be a decent substitute for the high-flying tech stocks. While as of yet there’s no sign of urgency for selling tech stocks, Bitcoin could be an ideal hedge for a tech-centric investment portfolio.
This post originally appeared on Medium. Read more.
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