In 2021, the price of the ETH rallied over a 200% increase resulting in a tremendous $380 billion market cap. This remarkable figure has pushed the value of the ETH network tremendously above the total market capitalization of notable companies like PayPal ($308 billion) and Procter & Gamble’s $326 billion.
The figure was achieved by multiplying the price of the last trade by the mind-blowing number of coins irrespective of whether they have been moved. Therefore, it seldomly shows the average price of the exchange most investors used for the transaction.
For the investors on the traditional finance system, they assess values by comparing valuations and multiples. And these are often calculated in the form of rewards, market share, and sales, and the attempt to employ the same metrics of value on the crypto space with multiple uses causes a level of discomfort and uncertainty.
ETH being a Multi-faceted Asset is Quite Difficult to Valuate
There is really no certain metric to be employed for the assessment of how ETH value stacks against its potential. The crypto might have served as a token for accessing the Ethereum network as well as being a store of value.
Therefore, when comparing several asset classes, one must put the coins deposited in exchanges into consideration as well as the percentage changing hands effectively. The existence of the controlled derivative crypto market gives room for institutional investors to stake against the price of the asset, which is another important factor to consider.
Though the advantages of comparing the market capitalization of several asset classes are questionable, the metric works in a similar way essentially for stocks, mutual funds, and commodities.
Based on the data released on infinite Market Cap, ETH has passed the market capitalization of the likes of Roche, Nestle, PayPal, and Procter & Gamble.
The international consumer goods company based in America was established in 1837, and there is diversity in the portfolio of the brands it holds, including hygiene, consumer care, and personal health, with about 100,000 workers across the globe. In 2020, the conglomerate recorded a net income of $13 billion.
The Risks Attached to Stocks Too Cannot Be Ignored
There are many similarities uncovered in the comparison of a 183-year company depending heavily on production and distribution and a protocol based on technology. Many equity investors have enjoyed their rewards though some are arguing that ETH could be staked for a better return, there is more risk attached.
Changes in the tax rate, regulations, and operational liabilities can be a major risk that stockholders face. Putting these risks and others together, many would conclude that holding Ethereum is less risky than trading stocks.