The S&P 500 and the Nasdaq Composite are officially both in bear markets, trading at levels more than 20% below their all-time peaks. However, the cryptocurrency market's sell-off has been much worse. According to CoinMarketCap, the global market cap of all 19,941 cryptos is now just $900 billion, down from a high of close to $3 trillion. 

That puts the value of the entire crypto market just below that of Amazon (AMZN -0.51%), which despite being down over 40% from its high is still worth more than $1 trillion.

Given their similar total valuations, it seems natural to compare the two and ask which would be the better investment now: Amazon or a basket of all 19,941 crypto tokens?

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Buying into every crypto would be extremely challenging

Even if an investor wanted to, it would be nearly impossible to buy tokens from all of the cryptos in existence. For starters, exchanges like Coinbase only offer a few hundred cryptos. There are other exchanges like Kraken, Celsius, and FTX, of course. And you can even buy crypto through Robinhood. But each exchange has its own set of risks. For example, Celsius recently paused transactions and withdrawals due to crypto volatility. 

Even if an investor could manage the logistics of buying all the tokens, it probably wouldn't be a good idea. The vast majority of cryptos are speculative and tied to projects that are in their early stages. Moreover, the cryptocurrency arena is unlike the stock market in that even the two tokens with the largest market caps -- Bitcoin (BTC 4.76%) and Ethereum (ETH 2.03%) -- are far riskier than the largest two U.S. companies by market cap, Apple (AAPL 0.95%) and Microsoft (MSFT -0.07%). Apple and Microsoft provide products and services, generate profits, pay dividends, and buy back a ton of their own shares. Plus, they own tangible and intangible assets and have management teams that investors can hold accountable. By contrast, cryptos don't provide forecasts because there's no underlying operating business. Their values are more abstract in nature and will remain hard to quantify until the industry becomes more mature.

The crypto market also remains concentrated. Despite being down over 70% from their all-time highs, Bitcoin and Ethereum still make up a staggering 55% of the total crypto market cap, whereas Apple and Microsoft together make up less than 10% of the U.S. stock market.

The best way to approach crypto

Bitcoin and Ethereum are often lumped together as similar assets. But they have starkly contrasting utility.

Bitcoin's value derives from its fixed maximum supply of 21 million tokens, its decentralization, its security, and its use as a store of value. Ethereum and other Layer 1 protocols like Solana (SOL -1.02%) and Cardano (ADA 0.39%) are the building blocks upon which numerous decentralized finance applications are being built.

Therefore, investors who believe that crypto will power practical applications for real-world use cases could consider a basket of Bitcoin, Ethereum, Solana, and Cardano. Whereas folks who just want a small portion of crypto in their portfolios and aren't familiar with the industry or development projects could be better served by simply buying Bitcoin.

Amazon could still be the better buy

If I had to choose between owning all of the existing crypto projects or Amazon stock, I think I'd go with Amazon. The sell-off in the stock presents an attractive buying opportunity. The company's low-margin e-commerce business is struggling amid persistent supply chain bottlenecks, higher shipping costs, and intensifying competition. But Amazon Web Services (AWS) alone is arguably worth more than $1 trillion. It's the leading cloud computing platform, has a high operating margin, a high growth rate, and provides Amazon with cash flow to reinvest in its other segments. The growth of AWS is expected to slow as the economy weakens. But over the long term, it's hard to imagine that AWS won't be significantly larger in 10 years than it is today.

Crypto industry challenges

Investors interested in cryptocurrency face myriad challenges. As was the case for the projects developed in the early days of the internet, many of crypto's early projects could prove to be useless over time. There's no guarantee that today's leaders will retain pole position in the decades to come. And the impact that regulation will have on the industry is hard to predict.

However, the risk-reward profile of crypto has become more attractive after its steep plunge. Bitcoin now is worth less than Visa -- which has a market value of $415 billion -- while Ethereum's $133 billion market cap isn't even as high as that of United Parcel Service. Now is an excellent time for investors who felt like they missed out on crypto's rise to conduct some research and take a good hard look at the industry. For those that feel it's still too speculative, Amazon is the better buy.