Crypto Crashed But Facebook, Amazon, Apple, Netflix And Google (FAANG) Stocks Lost Over $1 Trillion Too
Between the companies that make up the FANG (Facebook, Amazon, Apple, Netflix & Google), they have collectively receded by over one trillion dollars in collective market cap. This is a gut punch when considering that they have fallen from their all time highs. As it stands, the FAANG has officially lost more in terms of market value than all the cryptocurrencies combined over the course of this year.
The FAANGS Are Being Blunted
While anyone that is otherwise familiar with the cryptocurrency market knows all too well that it is currently going through some serious issues. But as some are otherwise unfamiliar, the crypto world is not the only investment area that is stuck in a bubble at the moment.
So is this an otherwise unusual area of the market? Not exactly, this is coming from the tech giants like Google, Amazon and Facebook, which are known otherwise as members of the tech group referred to as FAANG, and this is the group which has seen its share values and market caps fall downwards, culminating in a loss of $1 trillion over the course of 2018.
This is a disastrous amount of money to have cut off the major tech names, and has managed to dwarf the entirety of losses sustained by the cryptocurrency world. The latter of which has seen its market capitalization slip from 830 billion dollars during its high watermark point in January of last year, falling by a total of 700bn.
Out of all of these digital tech firms that make up FAANG, Netflix has proven to be one of the worst hit out of them, plummeting by 34.8% over 2018, this is followed swiftly by Facebook, which has faced a year of controversies, is the second place loser with a downward slide of 33.7% over the same stretch of time. This is according to information that has been shown by the investment new and information site – Investopedia.
Alongside these two poor performers, the age of Apple seems to be coming to an end, as disappointing returns on the newest iPhone sees stocks slide by 26.8% from its record price point per share – this makes for a decline of 14% compared to its performance in November.
While the following two have been able to get off relatively lightly compared to their peers, Amazon dropped by the still considerable 19.1 percent, with Alphabet, the parent company to the search engine behemoth, Google, followed shortly thereafter with a fall of 17%.
Before this bearish downward trend, the composites of the FAANG index were enjoying a profoundly long bull run, with share values continuing to surge upwards, floating a number of indices as a result. But according to their respective performances in July of this year, this is a bullish run that has otherwise come to a halt. As an interesting fact, July was also the point in time when we saw Bitcoin (BTC) peak and finally edge down from its highest bounce point of just over $8,000.
While the ongoing rate of decline that we're seeing from Bitcoin and the like, the belief that ‘Bitcoin is dead' is a lot more fiction than reality, with assumptions to the contrary being largely exaggerated. This comes from new research coming from analysis performed by the University of Cambridge, the crypto-based bubble involves a far more dangerous bubble with the prospect of being even more damaging than FAANGs fall, with all the risk of bursting to the tune of an 85% fall.
Bubble To Burst For Everything
The entire investing world has undergone a steady decline from the previously bullish market with the likes of indexes within the United States. These include the likes of S&P500 industrial as well as the NASDAQ 100. Both of which have encountered a dramatic slide of roughly 9.9 percent and 12.1 percent respectively.
So what has been causing this downward slide? It's largely to do with the fact that the FAANG had previously been performing at a red-hot intensity which subsequently turned into the stock-based rout in July 2018, with a large number of ETF's which were centered around technology experiencing and seeing a massive series of outflows over November. This is according to a recent report by Bloomberg.
“The conditions that have allowed these kinds of high-growth stocks to outperform have changed, if not reversed,”
says David Lafferty, chief market strategist at Natixis Advisors. “I just don’t see much upside.”
Conditions which appear to be very familiar have also encouraged a broader spill of this now cooling FAANG fall to hit the cryptocurrency industry over the course of this year too. Wall Street investors, as well as those involved in the retail sector had been involved in a lot more participation in the cryptocurrency world, regardless of the fact that it has, and always has been, a high stakes kind of game.
It was during this time that the recent addition of Bitcoin Futures demonstrated that Bitcoin had officially moved more into the prime time of the investment world, setting it off to new highs. This is compared to where BTC is right now, as it steadily slides down the $3,000's, a fall of nearly 85 percent compared to its crpyto ‘golden' value of nearly $20,000.
Crypto Wider Adoption Fueled By The Failings Of Banks
So, is there a hope for these respective stocks and cryptocurrencies? According to Lafferty, there does not appear to be that much hope from a short term perspective. This is due to the fact that a great deal of central bank policy has had a negative effect on the confidence of investors.
“The Fed’s tightening is getting to where it’s starting to hurt,” he says.
“GDP should decelerate in 2019, which will lead to a natural decline in earnings growth. What that means for multiples and investor sentiment is up in the air.”
Meanwhile, discontent and a distinct lack of faith in the economic system on account of the ongoing sluggishness of economic growth has resulted in protests in the capital of France. It is a profound concern that the ongoing economic slowdown is a worrysome piece of foreshadowing for a looming financial crisis.
It's not exactly all bad news, as the last time there was an economic crash (2008), the likes of Bitcoin emerged as a decentralized, more anonymous alternative to a multinational financial system which appeared to be failing.
As a result of these concerns, it shouldn't be a shock if we start to see a significant gap developing between the likes of Bitcoin and the Cryptocurrency world in contrast to the stock market's underlying performance in the near future.
Max Keiser had previously been speaking to news sites in the past. The former elite Wall Street investor and analyst of the investment world, he argued that Bitcoin was designed with the purpose of working in spite of any economic downturn.
“The adoption of Bitcoin has largely been fuelled by the chronic and acute failures of banks, with their tendancy to require bailouts, bail-ins, with a lot of political problems in between. One of the only problems and contends that it needs to face is the fact that the US Dollar has been steadily growing.”
With the anniversary of Bitcoin this year coming and going, it will serve as a rare acid test for Bitcoin to work against its larger, more established counterpart. The crypto, unlike the traditional market, isn't a stock and doesn't operate as a company share, but a means of transferring value. As a result, it can uncouple itself from the market at large, making it, at least somewhat exempt from the boom and bust of the market cycle.
Tom Lee remains an ardent believer in the undervalued status of Bitcoin compared to its counterparts, believing as well that its fundamentals remain relatively strong.
“Bitcoin’s fair value, given the number of active wallet addresses, usage per account and factors influencing supply, is between $13,800 and $14,800,”
Given that the current economic landscape doesn't bode so well for the markets at large, and cryptocurrencies, in particular, Lee finds himself in a highly optimistic sub-section of belief. Lee is also firm in his belief that treasury sales of ICOs (Initial Coin Offerings) are one of the primary reasons why cryptos are trading at a lower than expected price.
As a result, this current state of market correction may prove to be a necessary evil for the cryptocurrency world. Allowing Bitcoin to deflate and reach a strong value point from which to grow. Long-term, with the death of unprofitable businesses and poor projects, only those with legitimate and strong use cases will serve as the cutting edge of a new bullish upswing which will hopefully last for some time.
With a future financial crisis looming like a sword of Damocles, does Bitcoin have what it takes in order to survive and thrive? Does it have the power to outperform and outpace the likes of the FAANG stocks?