During a sit down with Cheddar, the Chairman of the CoinDesk advisory board, Michael Casey, talked about Bitcoin and the cryptocurrency market as a whole. Casey is best known as the co-founder of Network Effects Media. During the interview, Casey was asked if digital assets are being properly valued by investors or the current crisis is as a result of an error in valuation models. In response, Casey said that the current valuation models in the market are wrong because they are a bit backward.
Valuation Models For BTC Are Flawed
Explaining further, Casey said that technologies within the industry are seen as a means to remove intermediaries from different ecosystems. This will reduce the power centralized entities have. However, these blockchain-based assets are being valued similarly to how traditional assets are valued and this is a problem.
According to Casey, investors benchmark the performance of fiat money in determining the value of BTC in dollar signs instead of the iconic ₿(itcoin). What this means is that the cryptocurrency market is too focused on the markets entrance into fiat instead of on maintaining skin in the game. This leads to a misalignment of incentives because investors are more concerned about profit rather than disintermediation.
Keep in mind that Casey isn’t the first expert to say something like this about the industry. A few days ago, the CEO of BitPay said that the price of BTC is influenced by speculation more than utility. Many others have said similar things about the error in the valuation methods that currently exists in the industry.
During the interview, Casey didn’t give details about the right or specific ways to value cryptocurrencies. However, some investors use Network Value as their model when they want to determine the true value of BTC.
Valuation Based On Fundamentals
A while ago Fundstrat’s Tom Lee told his clients that BTC is currently undervalued and that the actual value should be between $13,800 and $14,800. He based his conclusion on the current fundamentals of the coin. Things like active waller addresses, BTCs characteristics, BTC trading volume, number of BTC transfers daily, etc. Lee has always been bullish about BTC and had previously predicted a bullish rally for the end of the year.
Right after he made the comment, he started receiving a lot of negative feedback from the community. Notwithstanding, even if it may seem unrealistic at this time, his opinion isn’t unwarranted. A while ago, Anthony Pompliano talked about how the Bitcoin network is still a solid project even with current prices.
According to Pomp, Bitcoin remains the most secure transaction settlement layer in the entire world so no matter how low the price goes, it will always have value. BTC will not go anywhere. He said that he is bullish about BTC because there has been a growth in transaction count, reduction in transaction fees, growth in hashrate, creation of active nodes, etc.
Joseph Lubin of ConsenSys and Ethereum, in October, talked about how Bitcoin has solid fundamentals even as the price crashes. In fact, he said that this is the strongest Bitcoin has ever been. He also suggested that the fall in price hasn’t kept true believers away from Bitcoin.
Bitcoin (BTC) Price Analysis
This past weekend, BTC had it rough. The price fell as low as $3200 on Friday. Yesterday, it attempted a recovery above $3300. This morning, the price started declining again fall to $3,268.73. This shows that it is down by 0.54%. The 24 hour trading volume is $3,571,321,849 and the market capitalization is $56,963,558,957.