The first reason is that there’s no real method for determining what the true worth of the Bitcoin actually is. There’s no fundamental, intrinsic value, fair value, anything.
Not that it’s easy to determine the fair value of other assets like real estate or stocks, but at least you can have a rough idea of what those assets will generate and what you should pay for them. You can use multiples or do a discounted cash flow to have a rough idea of the return you’re going to get, but you can’t to that with crypto.
The only option available to value bitcoin seems to be a huge amount of articles and youtube videos arguing that bitcoin’s gonna hit certain price targets by certain deadlines. And although there are people who think it’s going to hit $400k and then $1M per coin, the truth is that no one knows where the price is going to go. How do you know that? Because they’re not providing a single valid argument for it. The truth is that they’re all applying brand new models that haven’t been tested before (or worse, that they came up with themselves). Everyone’s throwing stuff at the wall to see what eventually sticks, but that makes each of these models at a high risk of being incorrect. I mean, many people don’t realize that for Bitcoin to hit $1M per coin, its market cap would have to be roughly 10 times the one of Apple or 15 times the one of Amazon.
There are people who try to apply a trading multiple like model to Bitcoin, while others argue that bitcoin’s history shows that price always hits a new high after crashing from its past peak. But the truth is, there isn’t enough of a track record to know that that’s a rule of nature, and there’s no chance to know what Bitcoin will be used for in the future. There hasn’t basically even been an interest rate hike since bitcoin was created.
I don’t have proof, but there’s reason to believe that most of the price appreciation Bitcoin has seen just tied to people trying to get rich quickly. As you can see below, Bitcoin’s not really been used more than it was back in 2017, when it had its first peak. The number of processed Bitcoin transactions has remained stable from 2017, regardless of the price movement, which brings me to my next argument.
