Applying Stock Market Metrics to the Crypto Market and Being Amazed

Today I will try to surprise you. Stocks are often valued based on the Price to Earnings (P/E) ratio, which is the price compared to the generated income (profit). In the context of blockchains, it’s more appropriate to compare this with the Price to Sales (P/S) ratio, which is the relationship between the stock price and revenue.

✔️ Let’s take a couple of successful American stocks. Such stocks often trade at high P/E and P/S ratios.

NVIDIA, the largest chip manufacturer on the planet: maximum P/S over the last 20 years ~ 35 and P/E ~89.

Coca-Cola: P/S ~ 6 and P/E ~34.

Alphabet (Google): P/S ~ 7 and P/E ~77.

✔️ Now, let’s look at Layer-1 blockchains.

We’ll assess them based on the metric: Price of circulating tokens and generated commission (P/F).

The chart and diagram are at the top. I specifically chose the price of circulating coins because if we consider all coins, the indicators are even more alarming.

Except for Tron, everything seems excessively expensive. Cardano’s price to commission ratio (P/F) is over 5000, and Solana’s is 669.

✔️ Separately, let’s look at P/S and P/F for DEXs. 👆

The ratio of the price of circulating tokens and generated income. For instance, the hacked Kyberswap looks ridiculous at current prices.

Here, the situation is more or less similar to real business.

📍 This is something to consider for everyone who predicts a 100x for altcoins and discusses what everything should fairly be worth. The influx of money from TradFi into the cryptocurrency market creates hype and Bull Runs. While BTC is perceived as digital gold, many view altcoins as an alternative to stocks.