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regulation, wash trading and whales aside, there's no way to really gauge the 'fair market value' of cryptocurrencies like Bitcoin. Sure, you can take the store

by hw 9y ago

regulation, wash trading and whales aside, there's no way to really gauge the 'fair market value' of cryptocurrencies like Bitcoin. Sure, you can take the store of value and gold argument and say that Bitcoin's market cap should be at least that of gold, but with it's volatility it's nowhere close to being a safe store of value. Ask the people who bought Bitcoin as a store of value at $20k The innovations and tech in the crypto space however has its merits. Regardless of what Bitcoin's price is, there is definitely value in the technology and the r&d that has come after it. People are so focused on the price and the speculation that it's ballooned into a classic bubble burst which is playing itself out right now. I'd actually argue that people trading the crypto space are actually less crazy than people 'investing' and 'hodling' their cryptocurrencies. Sure, there are degenerate gamblers who overleverage and get wiped out in a single trade, but the true traders are the smart ones. IMO it's crazy to invest in something where it's nearly impossible to ascertain a fair value or quantifiable fundamentals.

andrewla 9y ago
> regulation, wash trading and whales aside, there's no way to really gauge the 'fair market value' of cryptocurrencies like Bitcoin I think you mean "intrinsic value". "Fair market value" is the value determined by the market, and thus is easily available for Bitcoin (especially if you exclude regulation and wash trading, although the latter has little to no effect on pricing). The fair market value is determined by the real world market, not by any sort of technical analysis of what the price "should" be. If you did mean "intrinsic value", it's worth noting that this is very much an unsolved problem for almost anything. One of the most interesting market phenomenon out there are "close-ended funds" -- mutual funds that no longer issue new shares, but trade on the open market, much like ETFs. They have a value, the "net asset value" that represents the combined value of their holdings, which are fixed. Where things get strange is that they do not trade at their NAV -- they almost always trade at a discount or premium to that value. If you bought all the shares, then you could liquidiate the company for exactly the value of the NAV, so they should be worth that much, but for some reason, they are not. Find a person that understands how close-ended funds are priced, and you will find the next Nobel prize winner in economics.
uncletammy 9y ago
> IMO it's crazy to invest in something where it's nearly impossible to ascertain a fair value or quantifiable fundamentals. I'd say this fairly accurately described early Facebook

by hw 9y ago

andrewla 9y ago

> regulation, wash trading and whales aside, there's no way to really gauge the 'fair market value' of cryptocurrencies like Bitcoin I think you mean "intrinsic value". "Fair market value" is the value determined by the market, and thus is easily available for Bitcoin (especially if you exclude regulation and wash trading, although the latter has little to no effect on pricing). The fair market value is determined by the real world market, not by any sort of technical analysis of what the price "should" be. If you did mean "intrinsic value", it's worth noting that this is very much an unsolved problem for almost anything. One of the most interesting market phenomenon out there are "close-ended funds" -- mutual funds that no longer issue new shares, but trade on the open market, much like ETFs. They have a value, the "net asset value" that represents the combined value of their holdings, which are fixed. Where things get strange is that they do not trade at their NAV -- they almost always trade at a discount or premium to that value. If you bought all the shares, then you could liquidiate the company for exactly the value of the NAV, so they should be worth that much, but for some reason, they are not. Find a person that understands how close-ended funds are priced, and you will find the next Nobel prize winner in economics.

uncletammy 9y ago

> IMO it's crazy to invest in something where it's nearly impossible to ascertain a fair value or quantifiable fundamentals. I'd say this fairly accurately described early Facebook