The attempt to analyze Bitcoin turns out to be quite difficult for some investors. Unlike equities, or the underlying companies of equities, Bitcoin has no earnings, no cash flows, no results, or in a nutshell, no historical key figures in terms of a past forecast.
Basically, Bitcoin only has the law of supply and demand. And to be able to analyze this seriously, you certainly need different types of key figures. Let’s take a look at which three might be of interest:
1) Market capitalization
One measure you should have in mind when evaluating Bitcoin is the market capitalization of the cryptocurrency. This measure is important because it allows an objective comparison between the cryptocurrencies. Most of the cryptocurrencies have a different maximum level of available tokens besides a different price level. The market capitalization, that is, the amount of all available tokens multiplied by the current price, therefore provides an overall reference to the value ratio of Bitcoin to other digital coins.
Incidentally, you can also use the market capitalization to figure out what has to happen here so that the Bitcoin increases by 10, 100 or 1,000%. For an increase in value of just 10% would, given the current market capitalization, mean that another 15 billion euros would have to flow into the Bitcoin.
2) Network size
However, market capitalization alone is only suitable for putting Bitcoin in relation to other benchmarks. Although this is a first clue to your analysis, it may not be better to isolate this value for yourself.
Ideally, for a more in-depth analysis, we also need hard metrics that are only relevant to Bitcoin. One of these metrics may be the network size of the bitcoin. By this we mean the size that makes up the bitcoin network, that is the amount of people who use Bitcoin more or less regularly, or at least own it.
A problem with this metric could in principle lie in the determination of reliable data. Overall, however, much of the intrinsic value of Bitcoin should be reflected in this key figure. Because, as I said, Bitcoin is about supply and demand. And the more customers there are, the higher the value can sometimes rise.
3) Secondary industry and acceptance points
Closely linked to the network size are likely to be the acceptance points as well as secondary industry sizes that Bitcoin speculators should consider in their analysis. By this we mean the businesses, start-ups, companies, the fryhouse around the corner, and other business operators who apply Bitcoin in their business and payment processes.
As a currency, it should still be a goal of Bitcoin to find its way into everyday life. In addition to the speculative use (if one really counts on the success of Bitcoin), the digital coin will eventually find its way into the daily pay and payment traffic. Further acceptance points of any kind should therefore also influence the future performance of Bitcoin.
Serious analysis still difficult
As I could hopefully show, a reasonably serious analysis of Bitcoin is basically possible. However, even with the highly volatile, speculative investment in Bitcoin, you should keep in mind that reason may not be the best way to succeed here. In a market in which greed and fear are dominant factors, this variant of the fundamental analysis does not necessarily have to be promising.
In this context, it should be pointed out again explicitly on the common risks associated with Bitcoin, as well as the quite reasonable view that it can go downhill with Bitcoin steeply . So think carefully about whether you really want to speculate your hard-saved mice here.