FAANG vs. Bitcoin: Can the Leading Crypto Outshine Large-Cap Tech Names?

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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)

Source: tradingview.com

Figure 6: FANG+ Index vs. Bitcoin (YTD)

Source: tradingview.com

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.

Conclusion

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.

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

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