This post includes LEARNINGS, GROWTH SECRETS and INVESTMENT IDEAS.  See previous updates here.

Feature image:  BTC price hstory per halving epoch.  This visual and additional ones contained in my Visual Dataset.

I am a bullish on blockchain technology, which also generally means the entire crypto asset class.  I’ve sized my positions accordingly to manage my risk and while I don’t day trade, I do pick entry and exit points.  That said, I plan to remain at least partially invested in crypto, and at times, almost fully invested only in crypto over the long haul (5-years I am thinking at least)

I found this thread interesting to show how early we are in the digital assets/crypto adoption.

This asset class has already delivered stunning returns for me unlike anything I’ve done in the past, and I think will continue to do so.

A basic log chart showing historical and projected adoption.

This is a great answer in a member’s only network I subscribe to a question about how to value BTC.

The fundamental value comes from its security, its monetary policy, its monetary attributes, and its utility.

The security comes from its hashrate from over a million mining rigs. I assume you are familiar with its monetary policy as the hardest money or monetary asset ever put into circulation.

The essential monetary attributes were given by Aristotle some 2300 plus years ago as durability, divisibility, transportability, and intrinsic value.

Now we are getting a bit circular in reasoning but durability is in the design and security of the blockchain and the many full nodes that replicate the ledger. Divisibility comes from the 100 million Sats per Bitcoin. It is highly portable, an hour to anywhere on the planet with 6 confirmations in the blockchain.

Intrinsic value comes from having those other three Aristotelian attributes, plus fungibility, plus the high hashrate that makes it so hard to counterfeit (double spend), plus the scarcity of a disinflationary monetary policy ending in an absolute supply cap of 21 million.

The above are Money-ness and store of value and then there is the medium of exchange question. It has utility for largish international and domestic transfers due to its speed (one hour not T + 2 days), pseudoanonymity, and low cost compared to wire transfers. And one doesn’t have to talk to a bank employee!

Greater utility for say, buying coffee in one minute, requires second layer solutions such as Lightning and those are being built out. They basically allow batching of many transactions for later commitment to the main blockchain. Utility is also a product of network effects with the network more valuable as the number of Bitcoin users and HODLers grows (Metcalfe’s law).

What does all that imply about fundamental value? Well that is more art than science, how should one weight those factors? How fast will the network grow? How quickly will second layer solutions take hold at scale? How quickly will we bounce back from the Great Chinese Mining Shutdown and migration of hashrate?

Model prices including some of my own (Lindy, Future Supply, S-curve) have ‘fair values’ ranging from around $15K or $20K on the low side to over $100K for some of the stock-to-flow models. The volatility is high enough that all these models can give good fits to the data. Think in log price terms and standard deviations over a factor of two and positive skew for models.

The four year price floor that has alwayw held is down around $10K but will be near $20K in a year. https://stephenperrenod.substack.com/p/bitcoins-four-block-year-price-floor2

Amazed at how all markets have gone down except US in this time period.