Tokenized Stocks

Many people in the Web3 space are very excited about tokenized stocks, believing they represent the moment Web3 finally goes mainstream and attracts outside capital to the crypto space. This would seemingly be great news for the industry, pushing the entire crypto market cap up for the benefit of everyone. However, I hold the opposite opinion.

I am quite pessimistic about tokenized stocks; while I believe they will succeed, I also believe they will lead to the death of 99% of altcoins in the Web3 space. I think the most likely outcome is not attracting outside capital to crypto, but the opposite: the remaining liquidity will move away from altcoins and flow into the U.S. stock market.

The bull run that started in 2023 has a very distinctive characteristic: Bitcoin has led almost all of the growth, while traditional altcoins have lagged far behind. The best example is ETH, which, when adjusted for inflation, has not even hit its all-time high (ATH). The reason for this is that institutional money is flowing in, but it is only targeting BTC; these investors are not particularly interested in DeFi or meme coins.

We have seen a similar scenario in U.S. stocks as well. During this bull run, the "Magnificent 7" have been breaking ATHs daily, while most other stocks lag behind the index funds. This is largely caused by social media, which concentrates wealth and attention on only a few select stocks.

If we combine these factors, we can see why tokenized stocks could effectively wipe out 99% of altcoins. There are so many high-quality investment opportunities in the U.S. stock market that are better regulated and offer higher liquidity than meme coins or altcoins.

We already saw this trend in 2025, where gold, silver, AI, and energy stocks significantly outperformed the crypto market. The question is: if investing in U.S. stocks becomes that much easier, why would investors choose altcoins over small-cap stocks? Investors may even divert money from BTC to the Magnificent 7, as companies like Tesla and NVIDIA have seen returns comparable to or better than BTC.

In the U.S. stock market, we are looking at an overall safer, more regulated environment compared to the Web3 space, which is often full of scams and insider trading. We are talking about established companies with real value versus altcoins that consist only of a website and a whitepaper.

Therefore, while I think tokenized stocks will become a reality, I believe the outcome will be different than expected. Instead of bringing "Web2 old money" into the crypto space, tokenized stocks will likely suck liquidity out of Web3 as the U.S. stock market absorbs that capital. We are already seeing Web3 investors returning to the U.S. stock market; with the realization of tokenized stocks, we are going to see this shift happen even more often.

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