I think the value of Bitcoin and cryptocurrency is how much the person is willing to pay for it. It is somehow subjective but in general, it depends on supply and demand and its fundamentals. I do not think the value is dependent only on how one acquires the cryptocurrency through mining but rather it evolves around the supply and demand plus the fundamentals like the adoption, usability, or real-life case, cost of acquisition, and the long-term market of the said asset.
In addition Investopedia made a list of how to calculate Bitcoin's fair value. It is stated in this article: Do Bitcoins Have Intrinsic Value?
Topic: How to value bitcoin and cryptocurrencies? - page 3. (Read 388 times)
Market Cap = Current Price x Circulating Supply
Price = Marketcap divided by Circulating supply.
If people buy more bitcoin, the market will increase, which is proportional to the price. Which means as people buy more bitcoin than selling it, the price will increase.
Price = Marketcap divided by Circulating supply.
If people buy more bitcoin, the market will increase, which is proportional to the price. Which means as people buy more bitcoin than selling it, the price will increase.
There's also mining difficulty, total hash power and indicators used to determine what the average price of newly mined bitcoin is. The price of coins mined at different points in time create something that we could call price floor at that time. It's a similar indicator trader use to know how many holders are at a loss. The more people at profit the more above the average transactional price bitcoin is, which allows us to estimate its value.
I think giving value to crypto or bitcoin is through supply and demand. Of course, when more and more people develop an interest in Bitcoin to have it, the demand increases, and that is good news for us because the price value of Bitcoin will gradually increase in the market.
And what is also important here is that we will also look at its utility, which will be its usage, like in Bitcoin, where it can be used as a payment for a business that also recognizes Bitcoin, and in addition, it can also be used to send money to different parts of the world as well as other cryptocurrencies, if not all.
That's why we should know how to value Bitcoin when we do it in the era we live in today.
And what is also important here is that we will also look at its utility, which will be its usage, like in Bitcoin, where it can be used as a payment for a business that also recognizes Bitcoin, and in addition, it can also be used to send money to different parts of the world as well as other cryptocurrencies, if not all.
That's why we should know how to value Bitcoin when we do it in the era we live in today.
like we value equities using equations and ratios, what are the factors on basis of which one can do valuation of bitcoins and the other cryptocurrencies for that matter.
Bitcoin is not like any other type of asset, so everyone evaluates it purely individually. However, one great way to evaluate it is to see how popular it is with people when times get tough. And I noticed that often people prefer to reduce the share of Bitcoin in their portfolio if everything is bad. But on the contrary, they buy more gold. The conclusion from this is that people do not trust Bitcoin as a safe haven currency.
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The value of a coin or token is also dependent on the usability of the coin. For example, Bitcoin is a universal coin that a lot of institutions have adopted; many companies, some schools, and a lot of individuals worldwide are using Bitcoin. The high usability of Bitcoin and its limited supply are what give the coin great value. Normally, if there is a surplus supply and low demand, the value of such items will not really be of good value. For example, there are hundreds of alt coins that are not so valued, and the price of those coins is very low from year to year. The reason why this is so is because there is not much use for those coins, and they also have a huge supply compared to what they're used for.
the best method is to look at the most cost efficient method of acquiring an asset.
This has to be combined with utility that the product has. There cannot be a linear relationship between the value of a product and the cost to acquire the product. Gold is difficult to mine and has real world value, both factors has to be present. A product can have real world value but can be easily acquired anywhere in the world with no effort, and it can have no utility, but be very rare; in both situations the value of the product will be low.Bitcoin has utility which creates the demand, it also has a limited supply which means the demand is constantly growing against it.
Market Cap = Current Price x Circulating Supply
Price = Marketcap divided by Circulating supply.
If people buy more bitcoin, the market will increase, which is proportional to the price. Which means as people buy more bitcoin than selling it, the price will increase.
Price = Marketcap divided by Circulating supply.
If people buy more bitcoin, the market will increase, which is proportional to the price. Which means as people buy more bitcoin than selling it, the price will increase.
NO!
value is not market price
the best method is to look at the most cost efficient method of acquiring an asset.
for instance if it costs a gold miner $900 to mine. and thats the cheapest on planet, that is the value point
for instance if it costs a btc miner $24k to mine. and thats the cheapest on planet, that is the value point
value is not price..
think of value as the whole sale cost and the market as the retail price.
value is a different number to the market
bitcoin price(34k) sits nearish to good value(23k) compared to the ATH premium(70k)(2021 high)
0 23 34 70
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^
gold price(2k) sits no where near value(900) compared to the ATH premium(2.2k)
0 900 2 2.2k
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^
use the cryptos most efficient and least efficient mining cot on the planet to work out value vs premium.. then see where the price sits
to see if if the price is in value or premium zone
2023 adjusted view of bitcoin shows there is potential premium window limit of $140k instead of 2021's $70k which puts bitcoin more into the greenzone. however we have not tested the upper limits. so playing it safe bitcoin has potential to reach 70k again meaning a 2x upside atleast.
where as gold is near its all time peak meaning not much upside
Value is best on demand and supply. If people want something they will pay for it. And the person who has it can offer a price. That's how value is created. If the demand is high and the supply is low, the value will increase. And if the supply is high and the demand is low, then the value will decrease.
You can apply the same thing with Bitcoin and other cryptocurrency. There are other things like potential. If one can predict what the future is going to be then they will demand more. And based on supply the value will be created. It's a very simple thing. Bitcoin has created a reputation so I can't give good example with it. For that reason I am choosing alt coins. For example, if there is a new coin and people see that it has potential to grow by its use case and people behind it, then people will buy it. Thus creating a demand. Based on that those who created the coin could make an offer. And if the both parties are on the same page then they will make an exchange. And a value will be created. That's how it works.
You can apply the same thing with Bitcoin and other cryptocurrency. There are other things like potential. If one can predict what the future is going to be then they will demand more. And based on supply the value will be created. It's a very simple thing. Bitcoin has created a reputation so I can't give good example with it. For that reason I am choosing alt coins. For example, if there is a new coin and people see that it has potential to grow by its use case and people behind it, then people will buy it. Thus creating a demand. Based on that those who created the coin could make an offer. And if the both parties are on the same page then they will make an exchange. And a value will be created. That's how it works.
Market Cap = Current Price x Circulating Supply
Price = Marketcap divided by Circulating supply.
If people buy more bitcoin, the market will increase, which is proportional to the price. Which means as people buy more bitcoin than selling it, the price will increase.
Price = Marketcap divided by Circulating supply.
If people buy more bitcoin, the market will increase, which is proportional to the price. Which means as people buy more bitcoin than selling it, the price will increase.
like we value equities using equations and ratios, what are the factors on basis of which one can do valuation of bitcoins and the other cryptocurrencies for that matter.
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