What is bitcoin's fair value?
You're probably tired of hearing that the business cycle, Fed hikes, and equity correlation are in charge of bitcoin. So what's happening with bitcoin's fundamentals?
This post won’t mention the Fed, rates, inflation, or the economy. Just bitcoin. And before getting into this week’s analysis, I’d like to welcome Joe Consorti and Matthew Ball to The Bitcoin Layer. Joe and Matthew have joined me to take this publication to the next…layer? In all seriousness, I’m often reminded that a solid 98% of the world’s population doesn’t really have any idea what bitcoin is yet—and that demands education. Exciting developments coming from our growing team, stay tuned and subscribed!
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Joe’s favorite bitcoin metrics
Recognizing that macro is in the driver's seat when it comes to bitcoin price can calm investors during bouts of volatility, but having a framework for bitcoin valuation, outside of macro, can motivate one to time the market instead of cost-averaging purchases. I’ve written a few times on my favorite paired metrics of realized price and the MVRV (market value to realized value) ratio, but let’s find out The Bitcoin Layer’s new Research Associate’s favorite ways to assess bitcoin’s price.
co-written by Nik and Joe:
While technical analysis provides a sweeping overview of price action as a window into market psychology, on-chain data provides a detailed depiction of how the actual participants in the bitcoin network are behaving.
Wallet balances, exchange flows, and individual coin behavior can all be examined to get a deeper understanding of where the market stands, relative not to the business cycle, but to bitcoin’s four-year halving cycles and how miners and traders behave around them.
Let’s explore some simple metrics to paint a picture of bitcoin’s fair-valuation price level today.