The crypto market structure and the share market structure are similar but quite different. Each has its attributes which makes it unique and different. Let’s delve into the difference between crypto market structure and share market structure.
The market structure depends on where the price is in terms of it being in an uptrend, downtrend, or sideways.
Cryptocurrency is not regulated by the government, it works on a decentralized system that has different types of assets stored digitally. A share of a stock represents a percentage of a business. Share prices depict the valuation of a company. When you buy a cryptocurrency you own a set amount of currency. The market structure of cryptocurrency is usually dependent on the demand and supply along with faith in the underlying technology. When buying a stock or a share you need a brokerage account to own them along with the ability to conduct transactions. The account is the information verified and also offers protection in case of fraud. After purchasing a cryptocurrency it is stored in a virtual wallet or USB drive. It is a loose currency where the person has no access to an account if the password is forgotten the cryptocurrency can be anonymously purchased. Liquidity is the ability to trade at will. In the share market, the loss of active traders is present, thus contributing to the liquidity of the market. Top cryptocurrencies have more liquidity due to higher trading volume. This increases the risk of low liquidity for inferior cryptocurrencies.
The share market is known for volatility. Volatility is when a market or security experiences periods of unpredictable, and sometimes sharp, price movements. The volatility of stock keeps on increasing along with inventors also having sources of information to refer to in the neighborhood of the shares. Whereas, in the crypto market, there are lots of drastic changes that take place suddenly and without warning. Although there are high profits, there is also a risk of higher losses in a short period.
This is the main difference between the crypto market structure and the share market structure.
The share market is open from Monday to Friday and is closed on weekends along with holidays. There is also a fixed timing during business hours for trading. In the Crypto market, there are no such fixed timings the market is open 24/7 which makes trading easy.
After buying a share of the company you become a part-owner of the company itself. In the Crypto market, buying bitcoin or cryptocurrency does not represent the ownership of the market. Stock exchanges are an old using concept and are therefore much more accepted along with known by the means of the people. Cryptocurrency is new to the market and thus has much less popular among the masses currently. This is the difference between crypto market structure and share market structure that truly sets them apart.
To summarize, share or stock exchanges have been trading far and much longer than cryptocurrency exchanges and are therefore more trusted. Rules, regulations, and laws govern their activities and exchanges along with receiving government backing. Companies must also provide transparency to shareholders by making market activity public including quarterly financial updates and minutes of general meetings, as the shareholders are owners of the company.
Given their history, stock exchanges have high volumes and diversity of trade along with trust. The stock market also has a fixed trade system and there is no field for anonymity.
Cryptocurrency exchanges, on the other hand, are still comparatively new and are developing. Although there are moves to increase the regulation of exchanges to increase investor confidence, because of their recent introduction it has still yet to gain trust and establishment in the economic market. Given their technological aspect and anonymous transactions, the volume and diversity of cryptocurrencies being traded are also far less than that of stock exchanges.