Grayscale report: Bitcoin market value is severely underestimated


-Grayscale’s latest report shows that the market value of Bitcoin should be much higher than the current level.

-The inflation of traditional fiat currencies has prompted investors to find new ways to protect their funds.

-The company pointed out that Bitcoin’s verifiable scarcity and supply are not controlled by a central authority, which makes it a huge store of value.

On September 4, the cryptocurrency investment company Grayscale (Grayscale) released a new report entitled ” Valuing Bitcoin” , the purpose of which is to “help investors better understand why Bitcoin may be more important than ever.”


According to the researchers, the value of Bitcoin is inseparable from the currency history of the past 50 years and the inherent characteristics of legal tender. The report explains that as global inflation accelerates, demand for scarce currency assets such as Bitcoin is also growing.

“The Federal Reserve is printing more money and faster than ever before,” the report pointed out. “Although the U.S. dollar is still structurally strong relative to other currencies, the (quantitative easing) measures being implemented have already triggered The attention of investors who are cautious about currency inflation.”

In this unprecedented monetary and fiscal stimulus, especially due to the ongoing COVID-19 pandemic, investors are looking for ways to protect their stored value from the ever-increasing money supply. Gray said in the report that Bitcoin has all the features needed to fulfill this role.

“Because of the unique qualities of Bitcoin-such as its verifiable scarcity and the uncontrollable supply of central institutions-we believe that Bitcoin can be used as a store of value and as a way to avoid the current huge currency inflation. Way.” The report pointed out.

In addition, because Bitcoin is not a cash-generating asset, Grayscale stated that it is more appropriate to use a model similar to gold valuation to value Bitcoin, and cited the well-known investor Paul Tudor Jones (Paul Tudor Jones). Tudor Jones) said in a report written in May. In this report, Jones compares different stores of value based on purchasing power, credibility, liquidity, and portability, including financial assets, cash, gold, and Bitcoin.

Grayscale emphasized that although Bitcoin is at the end of these four asset rankings, its score “means that its market value should be much higher than the current level.”


Jones pointed out that Bitcoin scores close to 60% of financial assets, but its market value is only 1/1200 of financial assets. Image source: grayscale

Jones concluded in his letter to investors: “What surprised me was not that Bitcoin was ranked last, but that it scored so high.”

“Bitcoin’s overall score is close to 60% of financial assets, but its market value is 1/1200 of financial assets. As a store of value, it scores 66% of gold, but its market value is only 1/60 of gold.” He continued to add “There seems to be something wrong here, I guess it has something to do with the price of Bitcoin.”

Odaily Planet Daily Note: On May 8, according to Bloomberg News, Paul Tudor Jones, founder of Tudor Investment and a well-known macro investor, stated that he was buying Bitcoin to hedge against inflation caused by central bank money printing. Jones said in a market outlook report entitled “The Great Monetary Inflation”: “The best strategy for maximizing profits is to have the fastest horse… If I have to predict, I bet it is Bitcoin. “Jones said that his Tudor BVI fund may only hold single-digit assets in bitcoin futures, but he has become one of the first large hedge fund managers to accept bitcoin futures. Jones said that considering the impact of large-scale fiscal expenditures and bond purchases by central banks to fight the covid-19 epidemic, he has an incentive to conduct in-depth research on Bitcoin. Before realizing the “growing role of Bitcoin”, he had considered making various bets on gold, national debt, certain types of stocks, currencies, and commodities.

It is understood that Jones first ventured into Bitcoin in 2017, when his funds doubled and then withdrew from the transaction at a peak of nearly $20,000. He said that this time, he assessed Bitcoin as a store of value and believes that Bitcoin has passed four tests: purchasing power, trustworthiness, liquidity and portability. He pointed out in the report: “The most persuasive argument for owning Bitcoin is that with the outbreak of the covid-19 epidemic, currencies everywhere will be digitized.”

Echoing this view, the Grayscale report also pointed out that given Bitcoin is a scarce Crypto asset, Bitcoin may currently be in an advantageous position.

“Numerous blockchain indicators indicate that the current market structure is reminiscent of the beginning of 2016, the period before Bitcoin experienced a historic bull market. Bitcoin continues to attract the attention of global investors, despite the lack of supply. As the infrastructure is gradually in place, it can now meet the growing demand.” The researcher said.

Although Grayscale’s report believes that the value of Bitcoin is underestimated, recent market conditions have not given strong support. Bitcoin has suffered a sharp decline since September 2, continuing to fall from a high of $12,000, and once again fell below the $10,000 mark. The latest quotations show that BTC is currently consolidating around $10,500. Whether the bull market mentioned in the report can reappear, still needs to wait.

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