Stark Similarities and Differences Between Crypto Market, NASDAQ and SPX Distribution
The distribution in the crypto markets is dominated by Bitcoin with over 65% dominance. Apart from a brief period during 2017-2019, the over-all percentage dominance of Bitcoin has largely remained above 50%.
In crypto markets, the percentage weightage of second-highest cryptocurrency is 9.8%.
The NASDAQ 100 index comprises of 103 non-financial companies which include Apple, Microsoft, Alphabet, Intel, Facebook, Amgen, Starbucks, Tesla and so on. A major portion of which is comprised of technological companies. The top two companies with highest weightage are Apple and Microsoft with 11.8% and 11.4%, respectively.
Furthermore, the S&P 500 distribution tells a similar story. Although, the competition for the top position in S&P is close. The top companies with the highest market capitalization in the S&P 500 index are again Mircosoft and Apple with 5.6% weightage. The financial companies occupy positions post the 8th rank beginning with Berkshire Hathaway, VISA Inc. and JP Morgan Chase and Co. with 1.2-1.3% weightage.
However, there are more data points along the elevation of the curve on NASDAQ 100 and S&P 500 than the cryptocurrency markets.
Mean and Median
While the graph looks remarkably similar, the graph of the crypto market is particularly skewed. The comparison between mean and median values reveal the deviation.
While the mean of the two markets is comparable, the median is not. Hence, the frequency of rights for Nasdaq is concentrated around 0.346%, while that of the crypto market is 0.057. If a similar trend is to continue in the crypto markets, we can expect redistribution with lesser Bitcoin dominance and with 4-5 higher altcoin dominance.
The mean and median value of the top 5 companies on NASDAQ and crypto markets is (8.3, 10.1) and (16.62, 3.44). Hence, there is a considerable imbalance in crypto market distribution vs. NASDAQ.
Of course, these markets are fundamentally different, and many in the crypto markets are termed as ‘Bitcoin Maximalists’, who believe that in Blockchain and Bitcoin, not crypto. Nevertheless, many also perceive a tokenized future combining the utilities of these cryptocurrencies.