How do the cryptocurrency market and the stock market compare

I often read comments about how the crypto market and the stock market are completely different things and one should not look at the stock market as if it was the same thing. Well, I agree with this to some extent. However, I don't think it is that simple. I think comparing some of the similarities and differences between the stock market and the cryptocurrency market will help to give a better picture of how they compare.

What are the similarities of cryptocurrency and stock markets?

First of all, both of the markets function the same way. By their simplest, the price of both are determined by demand, meaning how much people are willing to pay for a share or a currency. This means that when someone pays more than the previous person the price goes up. When no one is willing to pay a certain amount at a certain time, and someone is willing to let go of their ownership for less, the price goes down.

Secondly, both of them can be valued based on the idea behind them. A stock is based on the business behind it and a currency is based on the idea, but the value in both lies behind the idea to some extent.

Thirdly, both of them are so far valued in fiat currencies. This might change, if the dream of cryptocurrencies comes true. But for now, we are stuck with this.

What are the differences of cryptocurrency and stock markets?

To begin with, even when the value is based on the idea of the currency or the stock, in the stock market you actually invest in the company, in the cryptocurrency market you invest in the technology or the currency, however you want to see it, but you never really get to own any part of the company, even if the business of the company affects the price of the currency.

This also affects the total evaluation of the cryptocurrency market, there is none. No one really knows what the total market capitalization for cryptocurrencies is. The cryptocurrency market also acts ten times faster (I don't know how true this statement is, but it is my guess, as I've said before). This affects everything. Prices go up faster, prices go down faster, prices change at larger magnitudes.

Market manipulation is something that doesn't really exist in the stock market, however, in the cryptocurrency market it definitely does. Is it a bad thing? Well, it depends if you get caught in between or not. To some extent it might be beneficial for the wider adoption, since it gets more people involved.

Following the last difference is the reason the stock market doesn't really have market manipulation, or a very minimum amount of it, and that is that it is regulated, whereas, the cryptocurrency market isn't. This affects a lot of the behavior. Any old tricks can be used, because no one regulates it. However, no one is saying that you must do what is allowed by an agency. Also, new competitors can come in much easier.

Finally, because new competitors can enter so easily in the cryptocurrency market, old currencies die much faster than old businesses die in the stock market. There is no reason for hundreds of cryptocurrencies to exist, where as there are reasons for hundreds of businesses to exist.

What does this mean?

It is hard to say how these similarities and differences affect, but one thing is for sure. Similar investment strategies seem to work in both markets. This means that abandoning what you have learned from the stock market is not a wise thing to do. The problem is when people think they have learned something from the stock market, but actually they've learned the wrong thing. For example, sell when prices are going down. Yeah, that will leave you at a loss in both markets. Holding until the end can also leave you at a total loss. How do you know what to invest in then? DO YOUR RESEARCH BEFORE INVESTING!

Thanks for reading. Any differences or similarities I missed? I'm sure there are. My intention was only to give a general overview.