Crypto Valuation

Dear Reader,

Cryptocurrencies are the main craze of the investment community since 5 years ago.

Bitcoin and other cryptocurrencies have attracted even regular people to invest their money and thus become, be it casual, finance specialists.

The Holy Grail, as with any other asset, is how to value cryptocurrencies. 

Finance theory bestows that valuation of an asset, stocks, for example is the combination of its future cash flows or dividends and their growth rate. All this is discounted with the interest rate level to arrive at the price of the asset. Interest rates and growth are the main variables and their sensitivity determines the fluctuations of the asset.

The main factors driving the prices of Bitcoin and other crypto assets are people's psychology, government regulation, the state of the stock market and company's prospects. In that order. People's psychology is a constant factor with gradual influence. By people's psychology I mean the inclination of people to accept Bitcoin as a means of payment, unit of account, and store of value or money. Government regulation has a more binary influence. If governments outlaw Bitcoin and other cryptocurrencies this will most probably be the end of the crypto assets market. When the stock market is rising, cryptocurrencies tend to increase in value. When a company that has issued a cryptocurrency token, or cryptocurrency with other worlds, has bright prospects the value of its crypto token increases.

All in all, cryptocurrencies' valuation, although different on the surface, is not that different from stocks' valuation. For stocks people's psychology, government regulation, the state of the stock market and company's prospects also determine a particular company's price. The channels of influence, though, are slightly different.

I forecast Bitcoin's price could reach 100 000 USD in five years.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich