Even for the biggest and best crypto assets, like Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), and XRP (CRYPTO: XRP), the Oct. 10 flash crash created significant sour sentiment. And, with the crypto sector’s weakness continuing rather than abating in the weeks after the crash, fears are now amplifying, with many investors using a bad month as a referendum on the whole asset class. Talk of dumping crypto and rotating the proceeds into equity index funds is loud and getting louder by the day.
So, without further ado, let’s take a look at the chart that’s making crypto investors dump their holdings, and then we can evaluate whether that might be the right path for you or not.
This is the worst lens to use for a multiyear decision
Here’s the 30-day performance of the crypto majors, compared to the performance of the stock market over the same period:
As you can see, the stock market has gained a bit, while the leading cryptocurrencies are somewhere between being dented and being in utter shambles (and it’s mostly gotten worse since I made this chart). Notably, it doesn’t matter whether we’re talking about a store of value like Bitcoin, a smart contract platform like Ethereum or Solana, a utility coin like Chainlink, a coin targeted at institutional finance like XRP, or even a meme coin like Dogecoin — everything is down a lot. The disconnect between cryptos and the market is why people are saying it’s time to sell crypto.
The flash crash was the proximate cause of this decline, and it’s not a surprise that a recovery didn’t kick in right away. Still, the bigger culprit is that the crash put the crypto sector’s riskiness and volatility into stark contrast with the stock market. Although the stock market does crash or go into bear markets from time to time, in the minds of crypto natives (and in reality), it’s a much lower-risk and lower-volatility place to invest, and large sums of stable institutional capital are allocated to most of the largest stocks.
But a month is not an investing horizon. Zoom out, and the story gets more nuanced. Stocks rose during the past 12 months, but Bitcoin, Ethereum, XRP, and Chainlink, among many others, outperformed the stock market in the same period, even when including the recent turbulence.
