Too Big to Fail? Crypto Market Size vs Traditional Assets

Disclaimer: The following article was written with data from 4 January 2022. NGRAVE will do its best to keep it updated. However, the text aims to demonstrate the order of magnitude and should not be interpreted as scientifically precise.

While it’s natural to wonder where we go from here (forget the moon, we’re shooting for exoplanets!), now seems like a good time to press pause and take stock. After all, we can become so obsessed with numbers that we don’t really bother to set them in proper context. Logically, the best way to appreciate the significance of a figure like $2.35 trillion is by comparing it to the value of other industries, assets, and investments.

If you’ve ever wondered how big the crypto market is relative to, say, national public debt, the real estate market, or global gold reserves, you’ve come to the right place. Let’s do this.

How Does Crypto Compare to Other Asset Classes?

Cryptocurrency is many things to many people. But while people can argue all day long about whether tokens are best viewed as stores of value or mediums of exchange, we can probably all agree on one thing: digital assets are, well, assets.

With this in mind, a good starting point for assessing the value of the crypto market is to compare it to other asset classes: precious metals, real estate, equities, debt securities, etc.

Crypto Market Size vs Precious Metals

Let’s start with precious metals, since the most valuable cryptocurrency of them all — bitcoin — is frequently touted as ‘digital gold.’ At present, gold has a market cap of $11.4 trillion, making it around 5x the size of the cryptocurrency market and 13x the size of bitcoin ($0.88tn). Of course, gold has been around for thousands of years and has numerous applications — jewellery, electronics, etc — so this is hardly a surprise.

Comparison of precious metals to the cryptocurrency market cap: Gold $11.4tn, Crypto $2.35tn, and Silver $1.28tn.

Even so, bitcoin’s programmed scarcity is increasingly causing investors to view it as a comparably sound safe-haven asset. In 2021, $10 billion has been pulled from gold funds as BTC posted new ATHs amid rampant money-printing. According to billionaire hedge fund manager Paul Tudor Jones, digital gold is “winning the race” against its physical counterpart.

Interestingly, the crypto market is almost double the size of the global silver market which stands at $1.28 trillion.

Crypto Market Size vs Real Estate

Comparing a decade-old industry to the global real estate sector seems borderline cruel, but we’re going to do it anyway. While the value of all the world’s real estate is somewhat difficult to gauge, it’s thought to be around four times as much as global GDP — and at least 160x that of crypto’s market cap.

Comparison of the world’s real estate ($340tn), including commercial real estate ($34tn), to the cryptocurrency market cap ($2.35tn).

Give or take a trillion, the real estate market is valued at an eye-watering $340 trillion, making it the most significant store of wealth known to man. Commercial real estate, incidentally, represents about 10% of the total figure.

Crypto Market Size vs Equities

Comparison of the global equity market ($122tn) to the cryptocurrency market cap ($2.35tn).

While the crypto market is a pygmy compared to the $122 trillion global equity market (October 2021), it’s not in a vastly different universe to the U.S. equity market, which is valued at $50tn, or the E.U. equities market which stands at $14tn. We’ll take a look at individual company shares later in the article…

Crypto Market Size vs GDPs, Public Debt & Student Debt

When set against individual nations’ Gross Domestic Product (the value of all goods and services produced within a country’s borders), the cryptocurrency market fares extremely well. Actually, it would sneak into the top ten, wedged between France ($2.63 trillion) and Italy ($1.889 trillion). The nations way out in front are Japan ($5.058tn), China ($14.723tn), and the United States ($20.894tn).

Comparison of the world’s GDP ($84.68tn) to the cryptocurrency market cap ($2.35tn), including Bitcoin’s market cap ($814 bn).

Bitcoin’s current market cap ($814 bn), meanwhile, would make it 17th in the global GDP league table, sandwiched between Netherlands ($913 billion) and Switzerland ($752 trillion) . The value of all the world’s bitcoin is higher than the GDP of nations such as Switzerland, Argentina, Saudi Arabia, Sweden and Thailand.

Comparison of the world’s public debt ($226tn) and U.S.’s student debt ($1.7tn) to the cryptocurrency market cap ($2.35tn).

What about the value of the crypto market versus national debt? Well, it’s in the same ballpark as UK government debt, which stands at £2.2 trillion ($2.97trn). Global debt levels, incidentally, are at a record high of $226 trillion amid snowballing government, household and bank borrowing. (Fun fact: the global monetary base is almost 5x what it was in 2008)

And here’s another interesting piece of trivia: the global cryptocurrency market cap is not far from the U.S. budget deficit for 2021 ($2.77 trillion) — and $650 million dollars higher than the U.S. student debt burden ($1.7tn).

Crypto Market Size vs Quantitative Easing Purchase Programs

A cursory glance at the Federal Reserve’s balance sheet since quantitative easing measures were introduced early last year makes for stark reading. Incredibly, the Fed has pumped over $4 trillion dollars into the economy since last March, bringing its balance sheet up to a bloated $8.56 trillion.

The new greenbacks introduced into the U.S. monetary supply could comfortably buy today’s crypto market — while also covering the student debt burden. In fact, there would be about $300 billion left over in change.

Comparison of the quantitative easing purchase programs ($8.5tn) to the cryptocurrency market cap ($2.35tn).

What about the quantitative easing introduced in the wake of the 2008–2009 financial crisis? Back then, the Fed embarked on a spending spree, initially buying up almost $2.1 trillion worth of treasury bonds and mortgage-backed securities. After a second round of QE between 2010–11, the Fed had added another $600bn of bonds to its balance sheet, bringing its total to $2.7 trillion — $350 million USD more than today’s crypto market cap.

Of course, the Fed’s expansionary policies haven’t really stopped — which is why many have turned their backs on fiat and embraced crypto (especially bitcoin) so wholeheartedly.

As for the Bank of England, its own multi-year ‘asset purchase programme’ saw it buy up $1.25 trillion in bonds, putting it in the same ballpark as the current bitcoin market cap.

How Crypto Market Cap Compares to War Bill

We often get a sense of the scale of something if we compare it to a larger, vivid thing. Take the war in Afghanistan, for example. According to the Costs of War Project at Brown University, the United States has spent $2.26 trillion since 2001 on the conflict, including $530bn of interest payments on government borrowing.

Comparison of the cryptocurrency market cap ($2.35tn) to the US expenses since 2001 on the conflict in Afghanistan ($2.26tn).

The UK and Germany, who had the strongest troop presence in the country after the U.S., spent an estimated $30bn and $19bn respectively over the course of the war.

The next time someone calls crypto worthless, tell them that the value of all digital assets currently in existence exceeds the amount spent funding America’s longest ever war. The combined outlay of Britain and Germany, meanwhile, is about equal to the eighth biggest cryptocurrency Polkadot, which launched in May 2020.

Crypto Market Size vs Worldwide Yearly Remittance & Green Investment

According to the World Bank, global remittances were around $702 billion last year. Remittances — money transfers made by foreign workers to family members in impoverished nations — are actually considered a promising use-case for cryptocurrencies, due to their borderless nature, speedy settlement times, and low fees.

Comparison of the cryptocurrency market cap ($2.35tn) to the global remittances ($702bn).

In any case, it’s interesting to note that the global remittance market is dwarfed by today’s crypto market. But what about green investment? Well, the global market has grown by over 50% since 2016 meaning sustainable investment assets are now worth over $35.3 trillion. On a per-country basis though, the crypto market more than holds its own.

Comparison of the green investment ($35.3tn) to the cryptocurrency market cap ($2.35tn).

Green investment in Canada, for example, is around $2.4 trillion while Japan’s market is just shy of $3 trillion. Annual global energy investments, meanwhile, stand at $2 trillion according to the International Energy Agency (IEA).

Crypto Market Size vs Global Industries

Of course, it should be noted that the $2.35 trillion figure doesn’t refer to the crypto industry as a whole; merely the total value of all cryptocurrencies currently in circulation. The industry, however, features many companies that are not directly concerned with the issuance of tokens; hardware wallets, marketing and media agencies, mining companies, blockchain startups, payment networks, crypto-focused venture capital funds, etc.

Comparison of the global industries to the cryptocurrency market cap.

Estimating the total value of the cryptocurrency industry, therefore, is difficult — but it’s likely somewhere between $2.35 and $2.9 trillion. So, how does this compare with other industries?

Well, crypto sneaks into the 2021 top 10 at the expense of the telecommunications industry ($1.74 trillion) but lags behind automobile manufacturing ($3tn), oil and gas exploration and production ($4.6tn), and food ($5tn). The global financial services industry occupies the top spot, with a market value of $22.5 trillion.

Crypto Industry Size Compared to Top Stocks

Last but not least, let’s pit the cryptocurrency market against the world’s best-performing stocks: the Microsofts, Apples and Alphabets of the world.

At the time of writing, Apple is the world’s most valuable publicly-traded company with a market cap of $2.98 trillion. Microsoft is close behind ($2.51tn) while Alphabet is in the third spot with a market cap just shy of $2tn.

Comparison of the world’s top stocks (Apple — $2.98tn, Microsoft — $2.51tn, and Alphabet — $2tn) to the cryptocurrency market cap ($2.35tn).

Not only is the global crypto market close in valuation to the world’s biggest tech giants, but its most successful asset — bitcoin — reached a $1 trillion market cap in 2021 much faster than those entities. In fact, it took half as much time (12 years) as Amazon (24 years) to reach the milestone.

While on the subject of trillion-dollar stocks, bitcoin’s market cap means that it would go straight into the top 10. The second biggest cryptocurrency Ethereum, meanwhile, has a larger market cap than Samsung, LVMH, Walmart and Procter & Gamble.

Conclusion

Twelve years ago, bitcoin was an idea; in 2021 it became the sixth largest base money on the planet. And it’s fair to say the wider crypto market is riding a similarly freakish wave, with new use cases (defi, gamefi, NFTs, privacy coins, etc.) emerging all the time. One wonders when the next earth-shattering milestone will be reached.

Hopefully this article has helped provide a little context to those scarcely comprehensible figures we see quoted so often. The question that now springs to mind is, how far can crypto go? Can it reach $5 trillion? What about $10tn? Is it a matter of time before bitcoin eats the gold market?

Sadly, we don’t have a crystal ball. One thing’s for sure though, the road ahead won’t be dull.