How to determine the intrinsic value of Bitcoin? Is it Possible?


This chart essentially provides me with another strong piece of evidence for my personal bullish sentiment. Moreover, the predicted value above by the end of this year is over $85,000.

This is a very tricky question yet important to understand the current trend of the BTC price and where we are heading. 

 
With technical analysis and market analysis, we really do not know when things turn upside down due to a serious market manipulation or an unexpected news. However, the good side is that all such ups and downs only last for a few days or weeks most of the time. 
 
How can we keep our “cool” in such situations? That is where we need a guideline for the intrinsic value or true value of Bitcoin today and that in the future. Yet, it's not pretty straight forward like calculating the intrinsic value of a company stock.
 
So far one of the best models that I came across is the Stock-to-Flow model by Plan B (we know this brilliant mind only by that name). 
 
In simple terms, the Stock-to-Flow model forecasts the intrinsic value of bitcoin by considering its comparable nature to similarly scarce commodities such as gold and silver. Despite the complexity of math behind it, what we need to understand is how accurate it was so far in the history. 
 
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As you can see in the above image, it was pretty accurate so far. The BTC price practically follows the prediction with slight ups and downs. 
The second chart that you can see is that deflection from the prediction. When the deflection equals one, bitcoin is fairly valued, when it's above, it's over valued, and when it's below one, it's under valued. 
 
This chart essentially provides me with another strong piece of evidence for my personal bullish sentiment. Moreover, the predicted value above by the end of this year is over $85,000. 

Is this model going to fail us this year? I simply don't have any evidence that suggests so, but many to support it as discussed in my previous articles.   
 
Not financial Advice, but analysis only.            
 
Dr. Buddika Adikari          


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