It’s been a wild year for Wall Street and the investment community. The unprecedented coronavirus disease 2019 (COVID-19) pandemic wiped away over a third of the S&P 500‘s value in about a month earlier this year, with the benchmark index logging its 10 largest single-day point losses and eight biggest single-session point gains in history in 2020.
These wild vacillations in equities have been akin to financial whiplash for investors.
The “Big Three” of cryptocurrency are unstoppable, once again
But not all assets received the memo that it was time to panic. Digital cryptocurrencies have been on fire since March, with the three largest digital tokens by market cap — bitcoin, Ethereum, and Ripple — leading the way. Since the stock market bottomed out on March 23, 2020, bitcoin, Ethereum, and Ripple have respectively gained 187%, 356%, and 289%, through the early evening of Nov. 23.
Why the resurging interest in cryptocurrencies after 2017’s price run and burst bubble? The best guess I can offer is the continued push toward cashless and digital payments. The COVID-19 pandemic has made consumers question their payment choices, with cash viewed as a potential harbinger of germs. As millennials and Generation Z have aged, they’ve grown into a larger percentage of the consumer pool. They’ve been far more willing than Gen Xers or boomers to embrace digital payment options.
Investors are also likely excited about the real-world applications for certain cryptocurrencies and their underlying blockchain technology. Blockchain is the digital and decentralized ledger responsible for recording all transactions without the assistance of a third-party provider. The expectation is that blockchain can improve security via its decentralization, as well as expedite the settlement of transactions — especially international payments.
Individual stories are at play, too. Bitcoin has become the go-to intermediary on crypto trading platforms for virtually all activity. If investors want to buy tokens of anything other than a major cryptocurrency, they’re going to first have to purchase bitcoin for exchange purposes.
Bitcoin’s trading popularity has been especially evident with digital payment platforms PayPal (NASDAQ:PYPL) and Square (NYSE:SQ). In October, PayPal announced that it would be launching a new service that’ll allow its customers to buy, sell, and hold cryptocurrency directly in their PayPal account. Meanwhile, Square has seen its revenue skyrocket due to bitcoin exchange on peer-to-peer payment platform Cash App. Square also acquired about $50 million worth of bitcoin tokens. Cryptocurrency stocks have been skyrocketing right along with digital tokens.
Another example is Ethereum’s smart contracts, which are…