Cryptocurrency: Basic value – Evaluation of the true value of cryptocurrency
The cryptocurrency market has been known for its volatility and unpredictability. As Bitcoin, Ethereum and other Altcoins rise, investors have put millions in these digital assets, hoping to make a quick profit. However, it is important to assess their fundamental value before investing or buying in cryptocurrency. In this article, we will go into the concept of fundamental evaluation and check how it is about cryptocurrency.
What is the basic value?
Basic assessment is an analytical approach that focuses on the basics of the economic basis, such as its market capitalization, revenue flow, user base, adoption rates and technical specifications. It helps investors understand whether the property is underestimated or overstated on the basis of these basic repairs.
Traditional evaluation method
In order to determine the value of the asset, traditional financial markets are largely based on the evaluation coefficients, such as the price and profit ratio. For example, if the company’s market capitalization is $ 100 billion and it generates $ 10 billion in revenue, its P/E ratio would be 1000. This means that investors are willing to pay $ 1 per income. However, this approach may not accurately reflect the true value of the active.
The unique properties of cryptocurrency
Unlike traditional assets, cryptocurrencies have unique properties that make them more challenging using traditional evaluation methods:
* Liquidity : Cryptocurrencies have extremely high liquidity, allowing investors to buy and sell it quickly. This liquidity can lead to rapid price fluctuations, making it difficult to accurately determine the active value.
* Visitness : Cryptocurrency prices are sadly volatile, and daily price fluctuations in one day often exceed 10-20%. This volatility makes the challenge to predict future performance and value.
* Limited Delivery
: Most cryptocurrencies have a limited delivery, which can lead to deficiency and increase demand.
Basic evaluation of the main cryptocurrencies
Let’s check the basic value of some key cryptocurrencies:
* Bitcoin (BTC)
: Since market capitalization exceeds $ 2 trillion, Bitcoin is the largest cryptocurrency. Its revenue stream includes miners for transactions and transactions.
+ Price -income ratio: approximately 30,000
+ Market Capitalization: More than 2 trillion USD
* Ethereum (Eth) : Ethereum as one of the most widely traded cryptocurrencies, Ethereum is a strong user base and significant revenue flows using transaction fees and smart contract placement.
+ Price and Market Ratio: About 20,000
+ Market Capitalization: More than $ 150 billion
* Litecoin (LTC) : With market capitalization of about $ 10 billion, Litecoin is a popular alternative to Bitcoin. Its revenue stream includes miners for transactions and the placement of smart contracts.
+ Price -Earning ratio: approximately 1000
Conclusion
While traditional evaluation methods can provide an insight into an active value, they may not accurately reflect the true value of cryptocurrencies. The fundamental evaluation offers a more comprehensive approach, considering the basics of the underlying economic cryptocurrency.
Investors should consider as follows assessment of the basic value:
* Market Capitalization : More market capitalization often indicates greater liquidity and reduced volatility.
* Revenue flows : Cryptocurrencies with significant revenue flows from transaction fees, smart contract placement or other sources can be more valuable than those who do not have the flow of these revenue.
* User Base : A powerful user base can increase cryptocurrency demand and price.