Bitcoin Valuation Models
14 min readarticle
How do you put a price on the world's first truly scarce digital asset? Stock-to-Flow says one thing. Metcalfe's Law says another. Production cost says another. The honest answer: no single model captures the full picture.
Explore various models used to estimate Bitcoin's fair value.
Valuation Models:
- •Stock-to-Flow: Scarcity-based model
- •Metcalfe's Law: Network effect valuation
- •Production Cost: Mining cost floor
- •Monetary Velocity: MV = PQ equation
- •Total Addressable Market: % of gold, M2
- •Power Law: Long-term growth trajectory
Model Limitations:
- •Past performance ≠ future results
- •Models can break
- •Multiple variables
- •Black swan events
Key Takeaway
Valuation models are useful for setting expectations and identifying under/overvaluation, but treat them as rough guides, not price targets. The market is the ultimate arbiter of value.
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