BTC - Fair value is $10,600 right now

in #bitcoin4 years ago

Bitcoin is up a bit in the past week, but still well below fair value

At least according to Charles Edwards.

Charles Edwards of Digital Asset Management, as well as a well-followed crypto analyst and market researcher.

According to his analysis, bitcoin's fair value based on energy consumption should be $10,600 currently:

(Source:

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But wait, does energy consumption really tell us anything about bitcoin's price?

According to Edwards, it absolutely does.

His research shows that the price of bitcoin is correlated with its energy consumption to the tune of about 80%.

Not perfect, but that is a pretty good correlation.

And right now, that correlation is saying prices should be up over $10k as shown on that chart above.

More about his research can be seen here:

https://medium.com/capriole/bitcoin-value-energy-equivalence-6d00d1baa34a

Adding to this...

Bitcoin is the highest returning asset over the past decade with the best risk-adjusted returns of any asset.

Which can be measured by its asset-leading sharpe ratio:

(Source:

So, we have an asset that has performed the best of anything else over the past decade trading below what could be considered fair value.

Oh and we are heading into a halving event.

Yea it's a good idea to be long bitcoin right now.

Stay informed my friends.

-Doc

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Posted using Bilpcoin

Cheers for sharing the insightful analysis. It appears to be an interesting approach, by measuring the energy it takes to produce BTC, and how it correlates into its future price potential. Moreover, it has an 80% correlation rate, which is rather decent if you're mixing this along with other indicators for long-term analysis :-)

Bitcoin and a lot of altcoins should be about 10x what they in reality are... This would put altcoins at same level as two years ago before the big climb. One can't just speculate price of Bitcoin based on its own price as number of altcoins is constantly increasing and that means Bitcoin must adapt or people will trade against other coins, including LTC and ETH.

It's just really difficult to say what something "should" be worth when it has no earnings, cash flows, or dividends. People have different definitions of what gives each project value. Some use user numbers, number of apps, transactions, cost of production etc etc etc. It's just tough to say what something is actually worth in this space. It's technically worth whatever the market says its worth. :)

It's easy with coins that have premine (with or without ICO), as the premine must cover all operating costs for whole lifespan of the coin. As such premine divided by total operating costs equal to value of one coin.

For coins without premine or ICO, the amount of mined coins per month need to cover the mining related expenses, so value for one user can be quite different than value for another user. For members of development team, value of mined coins need to also cover expenses related to operating the coin infrastructure.

Well that would give you the initial selling price of the coin, but the market price could and likely will be very different...

Think about my coin... first sells were at 8 sats, but pressure is for it to go up to 950-1000 sats... That's quite big difference.

 4 years ago Reveal Comment