How to value bitcoin and cryptocurrencies?

[Broadanbig]

I'll just say supply and demand. Apart from that I don't have any further idea. Maybe there's a little bit about adoption and marketcap. However, the most important thing when it comes to Bitcoin is supply and demand. It won't matter if the market cap is large but supply is greater than demand - Bitcoin prices will also be stable or even fall because there is not much demand here. In contrast, if supply is small but demand exceeds market demand, the market cap and price of Bitcoin will also increase rapidly.

The demand and supply factors are another consideration when it comes to Bitcoin getting value. These factors are very much important because they play a vital role in the circulation of Bitcoin in the society. When there are much demand for Bitcoin and the supply is low it triggers the value of Bitcoin to plummet to a higher price than it was before. When the rate of adoption increases, the tendencies of price increase is established because there would definitely be a high demand for Bitcoin. So therefore, the value of Bitcoin is also dependent on the supply and demand factors.

[Natalim]

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 raises its value because people are buying and there is an increasing demand while the supply remains. It is the same scenario that will happen to altcoins. As you can see many altcoins are dying because nobody is buying them and demand is declining. Well, we can say that people never value them as they are useless either. Bitcoin gain such appraise and continue growing because there is an increased number of users, investors, and traders due to its profit potential and usefulness, unlike these altcoins where most of them are useless and scam.

[oktana]

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.

Well, unlike traditional equities determining the value of bitcoin or any other crypto is quite more in-depth.

• Scarcity and Supply -> Bitcoin, for instance, has a capped supply of 21 million coins. The limited supply is a significant factor influencing its value.
• Adoption and Use Cases -> The more real-world applications and adoption a cryptocurrency has, the more valuable it is likely to become. Factors like how widely it's accepted as a means of payment or its use in smart contracts can affect its value.
• Technology and Development -> The development team's capabilities are critical. Updates, innovations, and scalability solutions can positively impact a cryptocurrency's value.
• Market Liquidity -> The ease with which a cryptocurrency can be bought or sold in the market affects its value. Higher liquidity can be an indicator of a healthier market.

That's as hot as my brain is for now , however there's more

[Obari]

Bitcoin raises its value because people are buying and there is an increasing demand while the supply remains. It is the same scenario that will happen to altcoins. As you can see many altcoins are dying because nobody is buying them and demand is declining. Well, we can say that people never value them as they are useless either. Bitcoin gain such appraise and continue growing because there is an increased number of users, investors, and traders due to its profit potential and usefulness, unlike these altcoins where most of them are useless and scam.

The market is volatile, which is one of the factors that are we should trade with prudence; any minor mistakes can result in a punitive fee, resulting in losses. Bitcoin is the independent valuable coin on the market; it is easily identifiable and frequently utilized in the system. Bitcoin can never lose value; it can only dump hard and liquidate trader accounts, but as the saying goes, what goes up must surely go down, and what goes down must surely go up. That is the exact movement of bitcoin in market charts, showing good concerns of bull and bear season.

[Bananington]

The best way I know to value crypto currency or BTC is by investment. Somehow, one has to get involved in the activities and projects that make these cryptocurrencies work and be an ambassador for it.
There has never been a better way to value BTC that to HoDL, trade or pay rapt attention to crypto signals and whale movements to gain the best vantage position. Also, now that the price if BTC is high, one way to Value it is to simply speculate to the mentees the market situation and guide them possibly to make better trading decisions.

[lombok]

I'll just say supply and demand. Apart from that I don't have any further idea. Maybe there's a little bit about adoption and marketcap. However, the most important thing when it comes to Bitcoin is supply and demand. It won't matter if the market cap is large but supply is greater than demand - Bitcoin prices will also be stable or even fall because there is not much demand here. In contrast, if supply is small but demand exceeds market demand, the market cap and price of Bitcoin will also increase rapidly.

The demand and supply factors are another consideration when it comes to Bitcoin getting value. These factors are very much important because they play a vital role in the circulation of Bitcoin in the society. When there are much demand for Bitcoin and the supply is low it triggers the value of Bitcoin to plummet to a higher price than it was before. When the rate of adoption increases, the tendencies of price increase is established because there would definitely be a high demand for Bitcoin. So therefore, the value of Bitcoin is also dependent on the supply and demand factors.

I will also add a little that causes an increase in supply and demand which can have a big influence on price movements. News and issues are very sensitive to Bitcoin, these two things can change sentiment in the Bitcoin market. Because Bitcoin's market cap is still relatively small and relatively new, Bitcoin is very likely to be manipulated, so to get involved in Bitcoin you really need to do detailed research on trends and so on.
As the old saying goes, the price of Bitcoin depends on FUD or Good News.

[hatshepsut93]

No one has derived any method for that, and no one has ever tried to seriously do it, at least to my knowledge. There are some very naive models, like thinking that Bitcoin's marketcap should be equal to the sum of all wealth, or all fiat currencies, but it's obviously useless.

It's just impossible to put a price tag on the properties that Bitcoin provides - being your own bank, censorship resistance, etc.

And currently Bitcoin is still in speculation phase where a lot of users just buy it to sell later, and this is the main drive behind supply and demand rather than Bitcoin's fundamentals.

[TimeTeller]

No one has derived any method for that, and no one has ever tried to seriously do it, at least to my knowledge. There are some very naive models, like thinking that Bitcoin's marketcap should be equal to the sum of all wealth, or all fiat currencies, but it's obviously useless.

It's just impossible to put a price tag on the properties that Bitcoin provides - being your own bank, censorship resistance, etc.

And currently Bitcoin is still in speculation phase where a lot of users just buy it to sell later, and this is the main drive behind supply and demand rather than Bitcoin's fundamentals.

Let us just be grateful that we have this new digital currency and we are enjoying the benefits of it.
There's no need to think about this value because you will only get crazy evaluating such worth.
For now, we are seeing how much it is being valued in the market by how much it is equivalent in dollars.

[Blitzboy]

I'll just say supply and demand. Apart from that I don't have any further idea. Maybe there's a little bit about adoption and marketcap. However, the most important thing when it comes to Bitcoin is supply and demand. It won't matter if the market cap is large but supply is greater than demand - Bitcoin prices will also be stable or even fall because there is not much demand here. In contrast, if supply is small but demand exceeds market demand, the market cap and price of Bitcoin will also increase rapidly.

The demand and supply factors are another consideration when it comes to Bitcoin getting value. These factors are very much important because they play a vital role in the circulation of Bitcoin in the society. When there are much demand for Bitcoin and the supply is low it triggers the value of Bitcoin to plummet to a higher price than it was before. When the rate of adoption increases, the tendencies of price increase is established because there would definitely be a high demand for Bitcoin. So therefore, the value of Bitcoin is also dependent on the supply and demand factors.

I will also add a little that causes an increase in supply and demand which can have a big influence on price movements. News and issues are very sensitive to Bitcoin, these two things can change sentiment in the Bitcoin market. Because Bitcoin's market cap is still relatively small and relatively new, Bitcoin is very likely to be manipulated, so to get involved in Bitcoin you really need to do detailed research on trends and so on.
As the old saying goes, the price of Bitcoin depends on FUD or Good News.

.. Indeed, news and other concerns have a big impact on the bitcoin market. Because of its comparatively tiny market capitalization, Bitcoin is vulnerable to manipulation and can be volatile due to sensitivity to market sentiments. As you correctly point out, conducting in-depth study on trends is essential for anyone wishing to work in this field.

Its interesting to consider this claim—that the price is influenced by FUD (Fear, Uncertainty, and Doubt) or good news—critically and consider how these aspects manifest themselves. With Bitcoin, news may travel fast and significantly change how markets behave. Investors must not only keep up with current events, but also assess them critically in order to determine how they might affect the market.

[coolcoinz]

As a guy that mines  I can tell you creating a coin is around 17-24k assuming just the power cost.

Makes perfect sense. Mining cost used to always work as the bottom line.
It can be broken with enough pressure, but only for a limited time.



I've always said that it's pointless to try to value bitcoin by looking at a daily exchange price, since the exchange volume is so small and people gamble (trade with leverage).
You either have to look at the average price like 200 MA, or at the mining cost.

[Aikidoka]

When it comes to Bitcoin, its price is mostly dependent on the buying and selling of it. If people buy more Bitcoin than they sell, then Bitcoin's price will increase and it's the opposite in the other case.

That's how the crypto market works. In addition to that, there are third-party factors that could affect Bitcoin's price, such as wars or significant world announcements related to Bitcoin and cryptocurrencies in general, as well as events like the halving as far as I know.

[Woodie]

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.

I don't think Bitcoin can really be valued using equations especially that some aspect of it is speculative!

AFAIK, Bitcoin price leans towards what the buyer/seller is willing to pay or offer hence the reason why the laws of supply and demand tend to be applied,it's only that we use centralised exchanges more often these days but with decentralized exchanges the buyer or seller fixes the price..which bases it's price at auction value...

[Fivestar4everMVP]

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.

When it comes to the value of bitcoin and other cryptocurrencies, the simplest form to explain how they derive their prices is, the market decide to the price of each and every coin or token, be it bitcoin, or the alternative coins.

Demand and supply plays the role in determining the price of a coin, like when demand for a coin like bitcoin is very high, and the supply, which is people willing to sell bitcoin is low, the price will always skyrocket, that is, go up, because many people are buying, but the supply is low to serve them all at the same time.

And so does it also work in the reverse, when demand is low, and supply, that is people selling, is high, the price goes down..

So overall, the market is the deciding factor, when it come to how bitcoin and cryptocurrencies prices in general, is determined.

[Z_MBFM]

Market Cap = Current Price x Circulating Supply

yup it is calculation of total market value of coin/token

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.

When the circulation supply is fixed, if investors buy more of that coin and sell less, then there will be a shortage of the coin and the price of the coin will rise. In order for the price of a coin to rise, the demand for that coin must exceed then its supply.

[Gladitorcomeback]

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 raises its value because people are buying and there is an increasing demand while the supply remains. It is the same scenario that will happen to altcoins. As you can see many altcoins are dying because nobody is buying them and demand is declining. Well, we can say that people never value them as they are useless either. Bitcoin gain such appraise and continue growing because there is an increased number of users, investors, and traders due to its profit potential and usefulness, unlike these altcoins where most of them are useless and scam.

Bitcoin is successful from the past and there occurs no reduction in its success therefore people are aware about its worthiness so they cannot ignore its utilities. Whereas altcoins may loss their value with the passage of time because most of altcoins are just trends based or working on one utility so people cannot believe altcoins as no body wants to get rid of their money. Altcoins like Ethereum are not included.

I will give an example that a person start business and if there is a more buyer of specific item then value will increase day by day with increase of demand and if buyer ignore any items then you will reduce its worth to attract more buyers to get rid if it. Same is with bitcoin and altcoins. Bitcoin has limited supply and large number of buyer which will definitely attract more buyers and high demand will lead to Increase in price.

[Crypto Library]

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.

In general, we value bitcoins or cryptocurrencies with dollars or other fiat currencies based on supply and demand. Which has already been explained beautifully by many people above. The matter is much like our daily vegetable market, when the production of vegetables is high, the price of the vegetable goes down, but when the production is low and the demand is high, the price of the vegetable or the product goes up. The thing is very much the same here.
However, I think that was not the main purpose of the invention of Bitcoin or cryptocurrency. It created a decentralized economy system where people transact with each other through cryptocurrency transactions. I actually mean that, eg: 1 Bitcoin is worth 1 Bitcoin.

[R100K-Martin-Lunger]

Valuing cryptocurrencies is a multi-faceted process. Several factors come into play:
1.   Scarcity: Consider the limited supply of Bitcoin (21 million coins) as a foundational pillar of its value. Other cryptocurrencies also have their unique supply constraints, influencing their worth.
2.   Utility: Cryptocurrencies serve various purposes, from Bitcoin's role as a store of value, medium of exchange, to powering smart contracts and decentralized applications.
3.   Demand: The interplay of utility, market sentiment, and regulatory factors fuels demand for cryptocurrencies.
4.   Network Effects: A cryptocurrency's value can be influenced by the size and growth of its network. A larger, more active network makes a cryptocurrency more attractive and useful.
5.   Cost of Production: Some cryptocurrencies, like Bitcoin, require significant resources for production, adding a layer of value due to their high production costs.
6.   Team, Community, and Roadmap: The strength of the team, the support of the community, and a well-defined roadmap are also influential in determining a cryptocurrency's value.
In the ever-evolving cryptocurrency landscape, prices exhibit constant fluctuations. However, a grasp of these factors can offer valuable insights into how to value cryptocurrencies.

If you have any questions you can contact me via my Discord: https://discord.gg/WyUZV2uP

[GbitG]

That's how the crypto market works. In addition to that, there are third-party factors that could affect Bitcoin's price, such as wars or significant world announcements related to Bitcoin and cryptocurrencies in general, as well as events like the halving as far as I know.

Very good, bro. You have raised a high point. I appreciate you expressing your position on this thread. Bitcoin generally depends on supply and demand. And secondly, according to my theory, the most important point is that, as you said, the split effect of the third party is also there in the price factor. I personally believe that the split effects of the Bitcoin price are on supply and demand.

In justification of this, if we look at the price of Bitcoin, the effect on supply and demand is equal to and even more than that, from fundamental aspects. Due to these fundamental events, the same technical effect has been seen in the price of Bitcoin. And those events are the same as you mentioned: there is war, announcements, halving, etc., which affect the price apart from supply or demand, just like bull runs after halving, and due to accidents like war or COVID, the price of Bitcoin is low. The effect has been seen.

[Onyeeze]

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.

Other cryptocurrencies is under bitcoin and bitcoin increase is what attracts the market of others and other cryptocurrencies can not do without bitcoin, so for this, I'm telling you that what you have to do is to make sure you have more of bitcoin than other cryptocurrencies because bitcoin have value and some of the cryptocurrencies is altcoins and they are not valuable and they are not same as bitcoin in terms of volatility, so I will say you should concentrate only in cryptocurrencies more and more than any other cryptocurrencies as I may say

[The Cryptovator]

Each asset's value depends on supply and demand. And value doesn't always depend on price. For example, if you create an altcoin and set a price of $1, if there is no demand for your coin, then there is zero value. When demand goes up, value goes up at the same time. It's not limited to the price. However, currently, market value fully depends on investors. When investors move on a coin, its value and price go up.