For Financial Advisors, Bitcoin Is the Next Nasdaq

Financial advisors like to talk about how bitcoin (BTC) is just a substitute for the Nasdaq because of its price volatility and high correlation to stocks.

They are more right than they know, but for the wrong reasons. In the 2020s, bitcoin will likely prove to be the driver of investment returns in investors’ portfolios, just as the top Nasdaq-listed companies were in the prior decade. Financial advisors had better position their clients accordingly.

Upgrading bitcoin from Amazon to Nasdaq

In late 2020, I argued that bitcoin was the next Amazon. So much has changed since then that this view needs revision. While I still think that bitcoin’s future percentage returns are on the same scale as Amazon’s (AMZN) were over a decade ago, framing bitcoin’s investment potential today in terms of a single company is now too limiting.

Today a better analogy is the elite members of the Nasdaq. At over $20 trillion of total market capitalization, this index (and its primary constituents) were the primary creator of wealth for stock investors in the decade that ended last year. The top seven companies in the index – Apple (AAPL), Microsoft (MSFT), Alphabet (Google) (GOOG), Amazon, Tesla (TSLA), Nvidia (NVDA), and Meta (Facebook) (FB) – accumulated approximately $11 trillion of total value, roughly $10 trillion (i.e., 90%) of which was generated in the last decade.

Regulatory hurdles for the Nasdaq darlings

Prior to the U.S. election in November 2020, I opined that the regulatory risk to bitcoin was already lower than the regulatory risk to the giants of the Nasdaq. Public opinion had already turned against these titans of the data industry, fueled by concerns about election tampering and manipulation. Terms like “surveillance capitalism” entered the vernacular.