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Even in a Bear Market, Bitcoin May Not be a Value Play

Bear markets in various assets, be they stocks, commodities and even digital currencies, have a way of bringing out investors looking for perceived value. The old lesson, however, is that there is value and there are value traps.

Mired in a bear market that has seen it lose more than half its value this year, bitcoin, according to some researchers, is still overvalued. The value of bitcoin, the largest cryptocurrency, is largely driven by the network of users. Researchers at ETH Zurich argue that the digital currency remains overvalued. At this writing, bitcoin was trading just over $7,000, well below its December peak of nearly $20,000.

“Drawing on a modified version of a model that assigns networks a value proportional to the square of the number of active users, and an equation that can capture how speculative bubbles evolve and grow, researchers at the Swiss university were able to observe how the cryptocurrency’s value rises with participation,” reports Bloomberg.

Assigning Value To Bitcoin

Currently, the combined market capitalization of all cryptocurrencies is $262.77 billion with bitcoin maintaining 45.4% market share. Based on those numbers, bitcoin’s market value is just over $119 billion, or about the size of downtrodden industrial conglomerate General Electric Co. (NYSE:GE).

While a market value of under $120 billion may not appear alarmingly high, particularly when considering Apple Inc. (NASDAQ:AAPL) is worth almost $858 billion, the ETH Zurich researchers argue that bitcoin’s valuation is still frothy.

“Their analysis ‘indicates current support levels for the Bitcoin market in the range of $22–$44 billion, at least four times less than the current level,’ the researchers said, according to a March 29 MIT Technology Review article,” reports Bloomberg.

Assuming the $44 billion valuation on bitcoin is accurate, that would mean the crypto, at least for now, is more valuable than eBay Inc. (NASDAQ:EBAY) and slightly smaller than the market capitalization on medical device maker Intuitive Surgical, Inc. (NASDAQ:ISRG).

A Fluid Situation

Market values are not static numbers, meaning the potential is there for bitcoin to revisit its glory days, particularly as adoption of and investment in digital currencies increase. For now, investment in cryptos among Americans is paltry compared to stocks, indicating there is a substantial runway for growth.

Still, over the near-term, investors may want to tread carefully with bitcoin because the ETH Zurich research cited in the Bloomberg article indicates that during past periods of substantial bitcoin overvaluation, large declines followed and then gave way to volatility and choppy trading.

Featured Image Courtesy Of The Coin Telegraph
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Bitcoin

Bitcoin Price Rallies 13% to Break Through $11,000

Within the last hour Bitcoin (BTC) price pushed through the $11,000 level in a high volume surge which saw the price reach a new 2020 high at $11,394.

At the time of publishing the price has pulled back slightly to the $11,150 range but purchasing volume continues to rise on the 1-hour timeframe. This suggests that the top-ranked digital asset on CoinMarketCap may have another go at the daily high.

Crypto market weekly price chart

Crypto market weekly price chart. Source: Coin360

As reported earlier by Cointelegraph, on-chain activity registered a significant spike in exchange inflow as Bitcoin price rallied above $10,000 and Bloomberg analysts now estimate that Bitcoin price will rise above $12,000 this year.

Ether price (ETH) also surged above its previous high by rallying to $333.52 but at the time of writing the top altcoin has pulled back below $330.

Bitcoin daily price chart

Bitcoin daily price chart. Source: Coin360

According to CoinMarketCap, the overall cryptocurrency market cap now stands at $326.7 billion. Bitcoin’s dominance index currently at 63.1%.

Also, don’t miss our upcoming conference Cointelegraph Crypto Traders Live.

More than 30 star speakers including Raoul Pal, John Bollinger, Mike Novogratz, DataDash and Jon Najarian will gather on July 30th to discuss the challenges of crypto trading. Join the show for over 9 hours of crypto trading content!

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Bitcoin

Did Satoshi Nakamoto Just Move 50 Bitcoin?

Key Takeaways

  • 50 Bitcoin that haven’t moved since 2009 were transacted today.
  • Some Bitcoin watchers speculate that these coins belong to Satoshi Nakamoto.
  • The coins were from Bitcoin mining around a month after the network was created.

BTC from the earliest days of the network moved today. Could Bitcoin creator Satoshi Nakamoto be behind the transaction?

Was Satoshi Behind a Recent Bitcoin Transaction?

A 50 BTC transaction representing a block reward from a month after the Bitcoin network launched moved today.

The coins were awarded for mining block 3,654. Several pundits have naturally associated that early mining activity with pseudonymous Bitcoin inventor Satoshi Nakamoto.

Others Are Unconvinced

The Block’s head of research, Larry Cermak, believes the transaction is unrelated to Satoshi Nakamoto, identifying that there were several early miners on the Bitcoin network.

Blocks believed to have been mined by Satoshi have a particular pattern in their nonces, a cryptographic number that can help identify blocks. According to that pattern, these Bitcoin do not appear to have originated from Satoshi.

Patoshi blocks
Courtesy satoshiblocks.info, Patoshi blocks

Another analyst noted that the transaction marks the first time that early 2009-origin Bitcoin has moved since August of 2017.

It’s the first time since August 2017 than someone spent coins from early 2009.

View image on Twitter

Nevertheless, on-chain sleuths will closely watch the path of the coins as the transaction was undoubtedly from an early Bitcoin miner and large holder. If these 50 BTC continue to move, then a lot more about this story will be revealed.

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Bitcoin

Bitcoin price rockets 23% as investors look for a new safe haven. ‘The crypto king is on fire.’

Cryptocurrencies have seen a remarkable resurgence as investors flock to relative safe havens amid a flurry of quantitative easing measures by global central banks.

Central banks including the European Central Bank, Federal Reserve, and the Bank of England have announced asset-purchase schemes in recent days. Bitcoin, a finite cryptocurrency with only 21 million units in existence, has seen a 23% one-day surge. Bitcoin is currently up 21% as of 10.10 a.m. in London (6.10 a.m. ET), per Coindesk.

The cryptocurrency had been down 30% year-to-date amid a sell-off fueled by market uncertainty about the outbreak of coronavirus. However, investors may be looking to digital currencies in the wake of easing measures elsewhere. Other cryptocurrencies like ethereum, XRP, and bitcoin cash all saw major reversals by more than 15% over the same period.

“When it comes to bitcoin, the crypto king is on fire, and we have seen a decent rally,” said Naeem Aslam, chief market analyst at AvaTrade, in a morning note.

“Given the fact that the price has crossed the $6,000 mark — an important level of resistance — the upward momentum is likely to pick up the pace, and if the price crosses the 200-day moving average on a daily time frame, it would be a huge buy signal.”

Volumes at cryptocurrency exchanges have jumped, with Coinbase, Bitstamp, and Bitfinex combined seeing a 19% bump in 24-hour exchange volume, according to data aggregator CryptoCompare.

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