Bitcoin 2022: Valuing Bitcoin Session Overview

The valuing Bitcoin session occurred in the afternoon on the first day of the conference. Brian Estes, Thomas J. Lee, Mike Belshe and Jan Van Eck participated. Mr. Estes is CEO and CIO of Off the Chain Capital. Off the Chain Capital started as a Family Office investing in digital assets and is now operated as an investment fund for qualified investors. Mr. Lee is the managing partner of Fundstrat Global Advisors. Mr. Lee is an accomplished Wall Street Strategist with over 25 years in equity research. Mr. Belshe is CEO and Co-Founder of BitGo. BitGo has a number of products to onboard and assist institutional investors in acquiring and holding cryptocurrencies. Mr. Van Eck is CEO of VanEck which is a global investment management firm. Mr. Van Eck was moderator of this session.

Mr. Estes kicked it off with discussing the use of S-Curve Analysis to value the adoption of new technology. With S-Curve the amount of time it takes to go from 0% adoption to 10% adoption is the same amount of time it takes to go from 10% to 90%. Mr. Estes postulated that since the US hit 10% adoption in 2019 and since Bitcoin came into existence in 2009, 90% of US households will own Bitcoin by 2029. He stated that Bitcoin is a mega-trend that cannot be reversed. Bitcoin is limited to a 21 million bitcoin limit and 19 million has already been created. The number of Bitcoin wallets being created since 2012 has been over 500% a year which Mr. Estes states is an indication of demand. He states that Bitcoin is the best performing asset class 11 out of the last 13 years due to this high demand.

Mr. Van Eck stated that the value of the network (Bitcoin) moves in lockstep with the number of transactions completed. Mr. Lee says that Bitcoin is a network value asset with the more people owning it the greater the utility and we should also take into account the activity per user. The Bitcoin price goes up the more people use it and once corporations come in the actual price will be much higher. Mr. Lee expects at least a 10x increase in price.

Mr. Estes discussed the “Stock to Flow” valuation model which is used to measure scarce assets such as Gold or Bitcoin. Right now Gold is the scarcest asset on earth by the Stock to Flow Ratio. When Bitcoin has it’s halving in 2 years it will make it twice as scarce as Gold. This predicts a $1M price of Bitcoin in a few short years.

Mr. Lee then discussed the important topic of Bitcoin volatility. Mr. Lee compared the volatility of Bitcoin to the volatility of Gold once citizens were able to purchase Gold. Gold’s price went through a number of volatile years until it stabilized due to its market cap size.

Mr. Belshe discussed valuing Bitcoin by user adoption as well as getting the banking system involved in holding Bitcoin for it’s customers. He said it is important for Bitcoin holders to also be able to interface with their traditional banks. He also brought up El Salvador’s bold move last year to identify Bitcoin as a legal form of payment. The government of El Salvador is trying to help their country and help the poor by providing them access to Bitcoin. El Salvador distributed Bitcoin to all of their citizens in the Chiva wallet. The roll out is going very well.   Bitcoin will also increase in value once it becomes a reserve currency. There is a big opportunity for Bitcoin in this potential use since Bitcoin is an asset that cannot change or be altered. 

Governments around the world are really trying to get a game plan on how to put policies around Bitcoin. In the US all branches of the Federal Government are tasked with coming up with Bitcoin policy. 

I think the general take away from this panel is that we are in the beginning innings of the Bitcoin phenomenon and that we will see significant adoption in the future which will push the price much higher.

The whole video is here with some interesting commentary to follow. You should watch it to get a feel for where this may be going.

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