Email of the day following up on my piece on valuing cryptocurrencies
Comment of the Day

November 23 2020

Commentary by Eoin Treacy

Email of the day following up on my piece on valuing cryptocurrencies

Thanks Eoin, but that still says nothing about what its value ought to be. With Tech companies there’s a long-term possibility of earnings for which a multiple can be applied or a Sales multiple for which there will be a precedent or relative multiple. There seems to be nothing of the sort for Crypto. So again, I’m left scratching my head as to what price should be paid for these, other than some chart history of where the price has been previously.

Eoin Treacy's view

The short answer to this question is that it is impossible to value an asset while it is still a fad. It might seem odd to still speak of cryptocurrencies as a fad but they have not yet made the leap to widespread adoption despite significant steps in that direction. When/If real world applications and mass adoption occur, it will be much easier to value. Of course, prices would necessarily be much higher once the value proposition is obvious. My firend Charlie Morris advocates using a network strength metric for value but I don't know how useful that is for trading. 

Click HERE to subscribe to Fuller Treacy Money Back to top