Stock market returns are overwhelmingly driven by a small group of winners. This phenomenon is not new, and we expect the same trend to emerge in the digital asset space. A study conducted by the University of Chicago’s Booth School of Business between 1926 and 2016, revealed that just five out of 25,300 publicly traded companies drove 10% of the entire U.S. stock market’s $35 trillion of total returns. This means that a small group of companies, representing a mere 0.02% of the total number of companies, drove 10% of the entire stock market’s returns.
The same trend can be seen in other markets as well. For instance, a study conducted by Credit Suisse in 2016 showed that the top 1% of the world’s publicly traded companies accounted for nearly 50% of the total market capitalization. This means that a small group of companies, representing only 1% of the total number of companies, drove 50% of the entire stock market’s returns.
The same trend is likely to be seen in the digital asset space as well. With the emergence of digital assets, a new asset class has been created that is not limited by geographical boundaries and is accessible to anyone with an internet connection. This has opened up a vast new market that is open to anyone who wants to invest.
Given the size of the digital asset space, it is likely that a small group of companies will emerge as the winners, driving the majority of the returns. This is because digital assets are still in the early stages of development, and the market is still relatively small. As the market matures and the number of participants increases, the number of companies driving the returns is likely to increase as well.
However, it is important to note that while a small group of companies may drive the majority of the returns, that does not necessarily mean that they will be the most profitable. There are still a lot of risks associated with investing in digital assets, and investors should be aware of these risks before investing.
In conclusion, the trend of a small group of companies driving the majority of the returns is likely to continue in the digital asset space. This means that investors should be aware of the risks associated with investing in digital assets, and should do their due diligence before investing. It is also important to remember that while a small group of companies may drive the majority of the returns, that does not necessarily mean that they will be the most profitable.
