Tuur Demeester suggests new ways to value Bitcoin

23 Feb, 2019
by Alberto Arnaldo
Price Analysis
Tuur Demeester suggests new ways to value Bitcoin

Tuur Demeester, founder of Adamant Capital, shared earlier this week a blog post including insights on Bitcoin valuation. Having dealt with many institutional investors, Demeester and other memebers of the Adamant team built their theories on work going back to 2011.

The blog post, which could also be called a small paper, was published on the 20th of February in the Medium of Adamant Capital. Other than a quite revealing history of Bitcoin valuation as context, the most interesting innovation proposed are two new ways of determining the market value of Bitcoin, accounting for saving behavior.

Relative Unrealized Profit is based on investor sentiment, meanwhile HODLer Position Change is based on insider buying and selling. 

The second metric is explained in the following way:

“A blockchain where all the coins move within a single block has at that moment a Liveliness of 100%. A blockchain of two years old with no new block rewards, and where exactly one year ago all coins moved within a single block and no transactions moved since, would have a liveliness of 50%. In other words, the measure fluctuates relative to the total lifespan of the blockchain”.

Another parameter of the model is the assignment of lower values to cryptocurrencies where there is a high quantity of coins which have been mined in advance.

It seems as if Adamant and Demeester just proposed another perspective to add on to the ongoing debate regarding how to accurately valuate cryptocurrencies.

Read more: Alternative metric to market cap shows the "fair value" of Bitcoin: $7,415Ethereum (ETH) criticized by Tuur Demeester: "not money, not safe, not scalable"

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