Market Cap of BTC & ETH vs Magnificent Seven

The phenomenon of Magnificent Seven stocks arose as an effect of consolidation. When a company corners a particular market space, it gains enough momentum to continue growing and gobbling up startups that may threaten it later on. Moreover, these companies tend to become more efficient in scaling products, entrenching their market position further.

This process happened to Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), Amazon.com (AMZN), Nvidia (NVDA) and Tesla (TSLA). The Bank of America analyst Michael Hartnett dubbed them the “Magnificent Seven'' in April 2023. At that time, these stocks contributed to 88% year-to-date returns for shareholders.

Even though Tesla is losing its standing, the Magnificent Seven still outperforms the wider market. The Roundhill Magnificent Seven ETF (MAGS) returned 35.8% year-to-date compared to the broad market benchmark S&P 500 (SPX) at 15.1% for the same period.

With their outsized market performance, Magnificent Seven stocks —comprising ~30% of the S&P 500—represent the concentrated US tech stock market. As such, how do they compare with other types of technology with no earnings—blockchain networks?

Specifically, how do Magnificent Seven stocks pair against Bitcoin (BTC), representing proof-of-work, and Ethereum (ETH), representing proof-of-stake?

Has Crypto Outperformed The Magnificent Seven?

Crypto managed to outperform the majority of Magnificent Seven stocks, but it also had significantly lower market caps in 2019 compared to the stocks. What is the performance of the Magnificent Seven, Bitcoin, and Ethereum?

Ordered by market cap weight, over five years, from May 7, 2019 up until June 28, 2024 they rank as follows:

Nvidia and Tesla are clear winners in terms of how rapidly their valuations expanded, at 2,782.8% and 1,102.2% increases, respectively. Amazon is the slowest grower alongside Meta. 

Together, these companies have a $15.770 trillion market cap, a 262.5% increase from $4.35 trillion five years ago.

Nvidia Outperformed Bitcoin & Ethereum Over The Last Five Years

Nvidia was the only stock from the Magnificent Seven that outperformed both Ethereum and Bitcoin over a five-year period. Its market cap grew from $105.42 billion to $3.039 trillion, representing a 2,782.8% increase over the period. Out of the total crypto market cap of $2.46 trillion, as of June 28, 2024, Bitcoin and Ethereum comprised 66.9% at $1,250.0 billion (49.9%) and $421.0 billion (17.0%), respectively.

Over the last five years, from May 8, 2019 to June 28, 2024 Ethereum (ETH) market cap increased from $18.16 billion to $368.3 billion, representing 1,880% market cap growth.

Over the last five years, from May 8, 2019, to June 28, 2024, Bitcoin's (BTC) market cap increased from a nearly 6x larger position of $103.98 billion to $1,257.16 billion, representing 1,109% market cap growth.

In other words, Ethereum outperformed Bitcoin by 1.7x, given that Ethereum launched six and a half years after Bitcoin. Therefore, Ethereum had a lower market cap as the growth baseline. Compared to Magnificent Seven stocks:

• Ethereum’s market cap performance is aligned with Nvidia, at 2,218.3% vs 2,782.8% respectively. 

• Bitcoin’s market cap performance is aligned with Tesla, at 1,102.2% vs 1,340.8% respectively.

How Does the Market Cap of Magnificent Seven Compare Against Bitcoin & Ethereum?

To the surprise of many, the Securities and Exchange Commission (SEC) shifted its stance on Ethereum ETFs. As of May 23, 2024, the market watchdog agency approved three exchanges to potentially list and spot-trade ether funds. Across NYSE Arca, Nasdaq, and CBOE BZA, that makes for eight Ethereum ETFs. 

Accounting for this new development, as of June 28, 2024, the comparative market caps of all Magnificent Seven companies, in addition to Bitcoin and Ethereum, look like this.

Taking into account the growth of the last five years, since May 2019, Nvidia and Ethereum achieved the highest comparable market cap growth at 2,782.8% and 2,218.3%, respectively.

Combined, they hold $17.44 trillion value, of which Bitcoin and Ethereum make up 9.6%.

Bitcoin and Ethereum Market Cap Divergence

As can be seen in the above charts, Bitcoin and Ethereum’s hills and valleys align with bullish and suppressive events.

• PayPal’s announcement to integrate cryptocurrencies in October 2020.

• Elon Musk ditching BTC payment for Tesla, as a major suppressive event

• After this adoption milestone, the bull run ended with the collapse of Terra (LUNC) in May 2022.

• The start of the Federal Reserve’s interest rate hike in March 2022 kept the suppressive momentum going.

• Following multiple bankruptcies, from BlockFi to Celsius, 2022 ended with the collapse of FTX in November, the third largest crypto exchange by volume.

• Starting with the regional US banking crisis in March 2023, BTC and ETH began to recover. 

However, after the Securities and Exchange Commission approved 11 Bitcoin ETFs on January 11, 2024, there was greater divergence in Bitcoin vs Ethereum growth. From that institutional adoption milestone, Bitcoin market cap increased from $838.38 billion to $1,250.00 billion, representing 50% market cap growth.

In the same period, Ethereum market cap increased from $281.14 billion to $421.00 billion, also representing a 50% growth. This is not surprising, given that Ethereum is set to get its own lineup of ETFs. However, Ethereum's market is significantly smaller than Bitcoin's, so one might have expected better performance from it.

Methodology

The study examined the market cap of Magnificent Seven stocks versus Bitcoin and Ethereum as of June 28, 2024. The Magnificent Seven stocks consist of Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla. Market cap data for Magnificent Seven stocks was collected from ycharts. Bitcoin and Ethereum market cap data was collected from CoinGecko.