Finding Fair Value
How can we value Bitcoin? What price models can we use to establish an estimate of 'fair value'? Today's analysis covers a suite of valuation models, and where the BTC price is relative to each model.
G’day Folks,
One of our Checkonchain Orange members asked me a great question last week, and I immediately recognised we needed a post covering it. To paraphrase:
How do we fundamentally value Bitcoin?
Bitcoin is a unique asset, in that it is purely a monetary asset, it has no industrial use case, it can’t be used in dental fillings, and it has no direct cash-flows associated with it.
Naturally, there have been countless attempts at constructing models which can predict the Bitcoin price. The vast majority of them have failed, and some in truly in spectacular fashion (yes, I am looking directly at you Stock-to-flow version 12…and your global M2 correlation).
In today’s post, I will explore a set of valuation models which I think are at least interesting to include in our mental models. I’ll explore a range of tools from:
Onchain cost basis models.
Key technical averages.
Cost of production models.
Regression and power law trends.
As always, whenever we can identify confluence between several models, it can help to add confidence about the trends playing out.
📈 Reminder: you can find the charts from our articles on the Checkonchain Charting Website, and a guide in our Charts Tutorial Video.
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