The 50-page report combines expert opinion with data analysis to debunk existing narratives and present novel models of evaluating Bitcoin’s value
NEW YORK, Oct. 01, 2020 (GLOBE NEWSWIRE) — ByteTree today published a report in collaboration with Bitstamp that explores the underlying factors dictating the price of Bitcoin entitled Bitcoin’s Value Drivers. The report is based on information collected from ByteTree’s extensive datasets, with the goal of discovering what’s keeping Bitcoin on top of the crypto markets today and in the future. Along the way, it introduces novel approaches to evaluating Bitcoin and debunks some common narratives that seem valid on the surface but fail under close scrutiny.
Generally, the report reveals the demand side is the primary driver of Bitcoin’s value and that the cryptocurrency has all the tell-tale signs of a risk-on growth asset. Highlights of the in-depth report include:
1. While Bitcoin is generally uncorrelated with the stock market, it shows significant correlation with certain (riskier) stock groups and the real estate market.
2. Bitcoin and gold are highly complementary assets in a portfolio that should be constantly rebalanced. In an investment sense, Bitcoin is the opposite of gold.
3. Miner activity follows price and not the other way around. Strong miner selling pressure signals a strong market.
4. Debunking the stock-to-flow model and presenting the Network Demand model as an innovative way to evaluate the value of Bitcoin.
5. Multiple ways forward: Scaling through the Lightning Network and fusing Bitcoin with DeFi to enable novel use cases for the oldest cryptocurrency.
“There are so many narratives floated around in crypto, the noise can sometimes drown out the core value drivers at work under the surface,” said Miha Grčar, Global Head of Business Development at Bitstamp. “Our goal with this report was to look deeper, figure out what drives Bitcoin’s price on a fundamental level and provide novel models for evaluating the market. This isn’t about hype and narratives, it’s about real insights that can help investors form a solid thesis.”
The report adopts the view that Bitcoin is an inherently “internet economy”, where its success is directly linked to the level of activity and the size of the user base on the network, and explores the significance of network effects on the largest cryptocurrency. It lists some of the primary metrics that ByteTree tracks and demonstrates how to apply them to a relative strength model for Bitcoin’s economy. It also delves into the underlying technological framework of Bitcoin and proposes a number of possible ways for the asset to evolve further from a utility standpoint.
“Our aim is to use substantiated data to form novel views on how the Bitcoin economy functions and present reliable strategies for traders and investors in the space. In this effort, the support of a trusted and reliable exchange like Bitstamp is indispensable,” said James Bennett, CEO of Crypto Composite, the parent company of ByteTree. “Being an internet-native asset, Bitcoin has specific properties unlike any traditional asset, but we can nevertheless observe correlations between it and assets and instruments such as gold, stocks or bonds.”
This report is just one in a series that Bitstamp has been publishing with a range of research partners in an effort to bring transparency and credibility to the crypto space. In alignment with their goal to achieve freedom of exchange, the pioneer exchange believes that amassing in-depth knowledge and expert opinions about the space and sharing these insights freely with the community will have long-term positive effects and help strengthen the bridge between crypto and traditional finance.
To view a full copy of the report, visit: https://www.bitstamp.net/institutional-trading/?utm_source=press_release&utm_medium=post&utm_campaign=Bytetree_Report#marketing-insights.
Bitstamp is the world’s longest-running cryptocurrency exchange, supporting investors, traders and leading financial institutions since 2011. With a proven track record, cutting-edge market infrastructure and dedication to personal service with a human touch, Bitstamp’s secure and reliable trading venue is trusted by over four million customers worldwide. Whether it’s through their intuitive web platform and mobile app or industry-leading APIs, Bitstamp is where crypto enters the world of finance.
For more information, visit www.bitstamp.net.
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The ByteTree group provide applied data, research, asset management and advisory services for digital asset investors. ByteTree pioneered the Network Demand approach to investing in this asset class, measuring the health of the Bitcoin economy using data streamed directly from the ByteTree Terminal. The Terminal enables investors to monitor price, volume and a wealth of on-chain metrics in real-time or download data via the API for bespoke analytics. ByteTree believe that decentralized, peer-to-peer networks will play a major part in the economies of the future and support a fundamentals-driven approach to analysing them as they mature.