Crypto vs. Stocks Trading/Investing

Dec 28, 2021 02:10 PM ET
Crypto vs. Stocks Trading/Investing

When someone mentions the word 'investing' or 'trading,' stocks are usually the first thing coming to mind. Although humankind has been engaging in some form of exchanging since the beginning of time, the first historically recognized exchange was the Amsterdam Stock Exchange in 1602.

Several centuries later, stocks continued being regarded as the go-to option within any respectable investment portfolio. Although cryptocurrencies aren't necessarily challenging this status, this market has grown in leaps and bounds over the last decade.

Although the total crypto market cap of roughly 2.2 trillion pales in comparison to the entire stock market, it doesn't diminish the sheer number of investors who've taken an interest in digital currencies, sometimes in favor of equities. 

However, die-hard stock investors like Warren Buffett won't dare touch cryptocurrencies. Yet, both financial markets share some similarities. For instance, they are incredibly diverse. There are well over 15 000 cryptocurrencies and probably over 45 000 listed companies globally.

Still, these securities are pretty distinct as well. So, are you unsure which is better between the two? Worry not, as this article will cover the key differences to help you make an informed decision.

The ownership differences

One of the fundamental distinctions between digital currencies and equities is ownership. Unless you're trading shares as a derivative, a stock represents the equity in a publicly listed corporation.

With this share, some stocks offer shareholders certain voting rights and, more commonly, dividends which are portions of the company's yearly profits. Contrastingly, when one purchases any cryptocurrency, they're buying what many consider a utility token which doesn't represent a stake in the company that created it.

In many cases, most cryptocurrencies might not have demonstrable use cases. The concept of shares having more intrinsic value is always a topic of hot debate, but generally, the ownership aspect is the main contention.

The brands within stocks have tangible assets. With crypto, there isn't necessarily anything backing them other than the opinion of holders that a particular coin is valuable.

When we observe the drivers of stock prices, it's often for fundamental analysis reasons relating to the company's performance underlying the stock in question. In contrast, the rise and fall of cryptocurrencies tend to be driven by intense speculation.

The regulation differences

Overall, trading or investing in stocks is theoretically safer than cryptocurrencies because of regulation. Before being listed on any reputable exchange, any listed company goes through tons of red tape and laws. 

Moreover, after this process, the corporations are still subject to maintaining financial reports, updates, etc. Ultimately, most stocks uphold a respectable sense of transparency. On the other hand, cryptocurrencies are virtually unregulated due to their decentralized and anonymous nature.

Therefore, you are far more likely to encounter scams, fraud, and other malpractices with digital currencies with little remedy than you would with stocks.

The trading hours differences 

One highly favorable advantage of cryptocurrencies over stocks is that trading doesn't close, even during weekends and holidays. This means traders or investors can easily enter and exit the markets without delays. 

Stocks have traditionally always had limited trading hours, making it less flexible to enter and exit at will as you would with crypto.

The volatility differences

While several individual stocks possess above-average volatility, it pales in comparison to cryptocurrencies. 20%+ rallies and dips in a day are the norms with the latter, making it the most volatile among all markets. 

While volatility is often seen negatively, the gains made in cryptocurrencies are truly unparalleled because of how significantly prices can fluctuate in a short period compared to stocks. Therefore, the investment value with crypto is generally a lot higher.

The profit differences

This aspect applies to using traditional investing methods instead of derivatives trading. Some stocks provide two profit sources, one from the natural capital gains and dividend payments.

Of course, it's worth mentioning that not all stocks offer the latter. However, it's certainly an added incentive for investors. On the other hand, you can usually only profit from capital gains if you're dealing with cryptocurrencies.

Fortunately, with the rise of decentralized finance, many cryptocurrencies also offer more incentives for holding through yield farming (staking, lending, liquidity mining, etc.), providing attractive annualized percentage returns.

The market type differences

Similar to forex, you encounter pairs when dealing with cryptocurrencies. So, the price of any coin is paired against another fiat currency, usually the US dollar. Therefore, you can predict with reasonable accuracy which part of any pairing is likely to be weaker or stronger based on how the other half is performing.

Also, crypto-to-crypto trading is quite prominent nowadays. With stocks, you're dealing with an individual company and numerous factors affecting their valuation at any given time.

Final word: should you invest in crypto or stocks?

The table below details some of the key differences between the two financial securities:




Overall market cap






Industry perception

Often seen as more speculative

Often seen as more of a traditional, long-standing investment

Trading avenue

Brokers and exchanges

Brokers and exchanges

Number of markets



Fundamental price drivers

Mostly speculation

Mostly company fundamentals

Market hours


Limited business hours

Profit sources

Primarily capital gains, with yield farming on some projects

Primarily capital gains, with dividends on some stocks


Largely unregulated


So, the golden question you might be asking is should I focus on crypto or stocks, or perhaps a bit of both? Ultimately, crypto is a fast-growing, highly volatile, and riskier investment with not much of a track record. 

In comparison, stocks are a slow-growing, less volatile asset with years of performance history investors can reference. So, your decision between the two lies primarily in your risk tolerance. Both assets can be profitable but at different scales.

One of the challenges is government regulation, which will considerably affect cryptocurrencies. It's safe to assume stocks will still be around for decades as long as companies exist. On the other hand, it's harder to be confident of the same with crypto. 

It's one of the reasons investors diversify their portfolios to mitigate some of the unknowns. One isn't limited to only just trading/investing in one or the other. Therefore, you choose to be a specialist or have your fingers in different pies, both approaches which have their own unique advantages and disadvantages.



Don't miss: The Best Forex Robots in 2022

Best Forex Robots

Best Forex Brokers