Last updated on June 9th, 2018 at 12:43 pm
Cryptocurrency has exploded over the past year in why that defies all traditional rules of investment. There are countless theories and approaches to stock market investment and valuation, but a common rule of thumb is that a company’s market cap represents a lifetime of earnings. The basic mathematics underpinning this rule is that a company’s market capitalization should be around twenty times its annual earnings.
Of course, there are many other factors that play into stock valuation and market cap. Things like a company’s infrastructure and assets need to be taken into account, as does the potential for future growth.
Most cryptocurrencies are trading solely on their future potential. In fact, there are top cryptocurrencies which have little more than a white paper outlining their future growth potential. Some have yet to demonstrate a working product.
So how can you work out whether cryptocurrencies are correctly valued?
There is no exact science to valuing cryptocurrencies. Whether you consider them overvalued or undervalued is completely dependent on how strongly you believe in their future growth potential.
The intention with this article is to ballpark the value ascribed to the top 15 cryptocurrencies by showing which companies on the NASDAQ and NYSE stock indexes have a similar market capitalization. Wherever possible, this article focuses on the brands and companies which will be most recognizable to the largest number of people. There is more focus on retailers and clothing brands than financial services companies and retail investment trusts, simply because the aim is to make this information as accessible as possible.
And before we begin, it’s worth pointing out that the cryptocurrency market is incredibly volatile compared to the NASDAQ and NYSE. A 5% loss or gain represents a huge movement in the stock market, while 20% is earth-shattering. In contrasts, cryptocurrencies can move 5% in five minutes. A single-day swing of 20% is nothing out of the ordinary. Just in the past few weeks, IOTA and Litecoin have seen their values increase by magnitudes.
So these comparisons are by no means perfect, and they will be inaccurate within ten minutes of being written. However, it should help to give some perspective to just how reflective the market capitalization of the top cryptocurrencies is of their true worth.
The Total Market Cap of All Cryptocurrencies: $545 billion
As an emerging asset class, its common to compare cryptocurrency to long-term value stores such as gold. Many stories articles have been written on the potential growth this represents for cryptocurrency. The total current of all the gold that’s ever been mined would be in excess of $7.5 trillion US dollars, meaning cryptocurrency has some way to go before even representing a fraction of this market share.
However, if all cryptocurrencies were grouped together and listed on the New York Stock Exchange, they would be in first place by some margin. The biggest company on the NYSE is Alibaba Group Holding Limited, with a total market cap of $445.3 billion. To add some perspective, the total market of cap of all cryptocurrencies is around double that of Wal-Mart Stores Inc. ($287.68 billion) and significantly more than double Visa Inc. ($258.24 billion) and AT&T Inc. ($258.24 billion).
But cryptocurrency is valued at significantly less than NASDAQ’s biggest tech firms. Apple is top with a market cap of $893.22 billion. This is followed by two iterations of Google’s parent company Alphabet Inc., with a market cap of $741.88 billion each for both Class A and Class C shares. Counted together, Alphabet Inc.’s market cap is close to three times larger than the total market cap of all cryptocurrency.
Cryptocurrency also lags behind Microsoft ($670.01 billion). However, it would still be highly placed overall, being ranked between Amazon ($568.19 billion) and Facebook ($523.78 million).
Bitcoin: $300.38 billion
Bitcoin accounts for more than 55% of the entire cryptocurrency market. This is a long way off its peak, with Bitcoin for years accounting for between 80 and 90% of the total market. This market capitalization would place Bitcoin between Bank of America ($302.91 billion) and Wells Fargo & Company ($294.82 billion) on the NYSE. If its value keeps increasing, Bitcoin could eventually surpass entities like Exxon Mobil ($351.81 billion), JP Morgan ($368.28 billion), and Johnson & Johnson ($368.72 billion).
On NASDAQ, there is a huge drop-off from the internet giants and the next highest ranked companies. Bitcoin would be ranked comfortably ahead of Intel ($208.54 billion), with a lot of ground to make up before it surpasses Facebook ($523.78 billion).
Ethereum: $66.46 billion
There’s an even bigger gap between Bitcoin and Ethereum than there is between Facebook and Intel, although Ethereum is still far and away the second largest cryptocurrency.
Ethereum’s current market cap would place it between Chinese search engine kinds Baidu ($64.33 billion) and Disney’s recent acquisition Twenty-First Century Fox ($63.39 billion) on NASDAQ.
On NYSE, Ethereum would rank below Unilever ($68.93 billion), The Charles Schwab Corporation ($68.74 billion), and UBS AG ($67.34 billion), but above Norway’s Statoil ASA ($66.39 billion), Danaher Corporation ($65.39 billion), Canada’s Enbridge Inc. ($65.32 billion) and Colgate-Palmolive Company ($65.02 billion).
Bitcoin Cash: $30.43 billion , Ripple: $29.93 billion
Ripple is a fantastic example of just how volatile cryptocurrency market is. A week ago, Ripple’s market cap was less than $10 billion. On December 14, Ripple had a market cap of $33.68 billion!
It’s easy to imagine the pandemonium that would follow similar swings in valuation for the companies ranked around $30 billion market cap on NASDAQ and NYSE.
Both Bitcoin Cash and Ripple would be slotted below firms like Monster Beverage Corporation ($36.1 billion) and Electronic Arts Inc. ($33.65 billion) and above retail outfits like Ross Stores, Inc. ($29.03 billion) and Dollar Tree, Inc. ($25.2 billion) on NASDAQ.
On NYSE, they would be ranked between major US food distributors like Sysco Corporation ($31.78 billion) and Tyson Foods, Inc. ($29.89 billion).
Litecoin: $16.29 billion
Litecoin is another example of just how quickly cryptocurrency moves, with its market cap more than doubling over the past week. Litecoin’s current market cap would place it exactly between BioMarin Pharmaceutical Inc. ($16.34 billion) and Huntington Bancshares Incorporated ($15.76 billion) on NASDAQ.
On NYSE, Litecoin would rank beneath Dr Pepper Snapple Group, Inc. ($16.69billion), Twitter, Inc. ($16.51 billion) and Dell Technologies Inc. ($16.45 billion), but above American Water Works ($16.2 billion) and Yum China Holdings, Inc. ($15.58 billion), which holds exclusive rights to KFC, Pizza Hut and Taco Bell in Mainland China.
IOTA: $11.12 billion
IOTA’s recent movement has been even wilder than Litecoin’s, going from a market cap of just over $2 billion in late November to a high of $15.28 billion on December 6.
IOTA’s current $11.12 billion market cap would place it between Hasbro ($11.72 billion) and Garmin ($10.95 billion) on NASDAQ. On NYSE, it would be beneath Mexican media heavyweights Groupo Televisa S.A. ($11.34 billion) and above Gartner, Inc. ($11.11 billion) and Extra Space Storage Inc ($11.03 billion).
Cardano: $7.12 billion, Dash: $7.05 billion
Cardano has added more than a billion dollars to its valuation in the few hours that have passed since collecting the initial figures for this article and writing it, vaulting above Dash to become the seventh largest cryptocurrency. By the time the article’s published, it wouldn’t be particularly surprising to see it shift another billion dollars in either direction.
Cardano and Dash’s current market caps would place them below Xerox Corporation ($7.55 billion) and Macy’s Inc ($7.49 billion) and above Under Armour, Inc. ($6.7 billion) and packaged food manufacturer Pinnacle Foods, Inc. ($6.68 billion) on NYSE. On NASDAQ, they would rank between investment managers The Carlyle Group L.P. ($7.27 billion) and budget carrier JetBlue Airways Corporation ($6.83 billion).
The $4 to $6 billion Range
NEM: $5.5 billion
Bitcoin Gold: $5.05 billion
Monero: $4.97 billion
EOS: $4.84 billion
The ninth to twelfth ranked cryptocurrencies have similar market caps to a range of household name brands.
On NYSE, companies falling within this range include Herbalife LTD. ($5.84 billion), BlackBerry Limited ($5.81 billion), Six Flags Entertainment Corporation ($5.61 billion), Omega Healthcare Investors, Inc. ($5.59 billion). MID: The Madison Square Garden Company ($4.59 billion), and The Hanover Insurance Group Inc. ($4.38 billion).
On NASDAQ, these cryptocurrencies would be ranked alongside Dunkin’ Brands Group, Inc. ($5.54 billion), Logitech International S.A. ($5.5 billion), toy manufacturers Mattel, Inc. ($5.32 billion), Roku, Inc. ($5.12 billion), and TripAdvisor Inc. ($4.86 billion).
The $3 to $3.5 billion range
Ethereum Classic: $3.55 billion
Stellar: $3.46 billion
NEO: $3.14 billion
The final cryptocurrencies on this list also rank alongside some very recognizable brands.
On NYSE, this range includes Yelp Inc. ($3.51 billion), Marriot Vacations Worldwide Corporation ($3.49 billion), trucking and freight courier service BEST Inc. ($3.41 billion), Tupperware Brands Corporation ($3.28 billion), sporting giants Manchester United Ltd. ($3.21 billion), and Dick’s Sporting Goods Inc. ($3.11 billion).
On NASDAQ, these cryptocurrencies would rank alongside Urban Outfitters, Inc. ($3.55 billion), life insurance specialists American National Insurance Company ($3.29 billion), Bed, Bath & Beyond Inc. ($3.24 billion), and Groupon, Inc. ($2.95 billion).
So are cryptocurrency market caps a fair reflection of their worth?
Cryptocurrencies are of course entirely different in nature than profit-generating companies, but this list is nevertheless an insight into how much value is being ascribed to them.
While NEO has more world-changing potential than Bed, Bath & Beyond, it’s still far away from being a similarly recognizable brand. Manchester United are likely far more recognizable just about anywhere on earth than even Ethereum, yet the company behind the team has a market capitalization that is less than Stellar.
Of course, the market cap of cryptocurrencies is in constant flux, though it seems to be trending firmly upwards. The truth is that nobody yet knows how much cryptocurrency is worth. However, comparing cryptocurrency to other forms of investment should give some indication of what the current best guess is.