‘Extreme Volatility’ Expected as Bitcoin Investors Learn to Value It


There are many models to consider when valuing bitcoin (BTC). However, Nik Bhatia (Bitcoin advocate and author of Layered money) says there is no one way to value Bitcoin. There are many options.

Bhatia, in a new essay entitled Valuing Bitcoin, Diagnosing Its Unprecedented volatility, argues that “extreme volatility” shouldn’t be surprising given all the models used by BTC analysts and investors. Bhatia claims that it “should” be the base assumption for the BTC price because “nobody knows how to value it.”

Bhatia further justified his belief that there is no single correct model by pointing to the large differences between Willy Woo’s NVT model and Plan B’s S2F model. These models attempt to value Bitcoin using a similar methodology to what is used for silver and gold.

The popular author commented on the different BTC valuation models.

A true study of bitcoin valuation shows that it has many firm roots. Some roots are easy to value using on-chain and haveh rate analysis. Others are more difficult to quantify such as the network effects that are taking place now that bitcoin is fully capturing the attention of the world.

Bhatia also spoke in detail about his vision for the future bitcoin.

“I believe that government currencies will cease being in existence in countries without globalized economy, as people transact online in BTC and USD-linked stablecoins rather than unstable and non-digital governments currencies.”

He said that he thinks that it is unlikely that an entire generation will ever be able to have a relationship at a bank.

“In these scenarios bitcoin will emerge as the world’s reserve currency and knock on the door to the dollar. Bhatia explained, “How would you value it?”

He remains optimistic about bitcoin’s long-term prospects, but the latest Chinese crypto crackdown keeps investors alert for a possible short-term price reaction.

recorded on Sunday by the Whale Alert Twitter Account, USD 3.1bn USD1_ in BTC and USD 2.4bn ethereum(ETH) have already been moved from exchange wallets of Huobi (an exchange that has ties to Mainland China), to a greater number of unknown wallet addresses.

This is not necessarily a bad thing, but it does show that regulatory crackdowns have real consequences for what happens on-chain.

According to Santiment ‘s on-chain analytics company Santiment findings, the crackdown may even have a positive outcome. This is because bitcoin and crypto holders will be forced to take custody of their funds and not move them off exchanges. According to the firm’s data, bitcoin exchange balances are at their lowest level since May 2019, which is “a solid indicator” that there is less selling pressure.

However, the “all exchanges whale rate” has recently surpassed 0.5. A level one analyst at the on-chain analysis website CryptoQuant warned traders to “be cautious” about this.

We must ensure that the price remains above 40K. The analyst warned that price action below 40K could cause rapid and volatile changes in bitcoin’s short-term outlook.

BTC trades at USD 41.842 at 16:15 UTC and has almost remained the same day. BTC is now up almost 4% per week, reducing its monthly losses to below 15%.

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