Reprinted from 100, author: Vicissitudes of life
Call bitcoin people need to buy new reasons. Many people say that a bitcoin price index indicates that they are based on, even after more than a year for the first time in November 19th fell below $5000, bitcoin still have further to fall, the rate may be not small. More than a year ago, crypto currency presents a circle is equivalent to the “price / eye rate (price-to-eyeballs) index is used to measure the bitcoin valuation. “Price / eye indexes” had led investors astray in the Internet bubble and notoriety. For bitcoin, this index is the ratio of NVT, namely the network value and transaction value ratio. Some people called bitcoin earnings.
The idea behind the normal NVT ratio is, when little is known about how the valuation of the digital currency, bitcoin prices should be linked to its use. According to this logic, with more and more people in the buying and selling of goods using bitcoin, its scope of application will be more and more widely, therefore, this money should be more valuable. Some people call the network effect, the ratio of NVT is to assign a number to it. With the transaction value (ratio T) increased network value (i.e., the total value of all bitcoin) should also rise. If the transaction value increases rapidly, then NVT should be more improved, and the rapid rise of technology stocks are often accompanied by high price earnings ratio of a truth. A year ago, when the bitcoin price is $8200, in the past year rose hundreds of times when the NVT ratio was 57. In 2014, bitcoin NVT ratio of around 200, 2011 at about 350, but it was rarely used bitcoin. The conclusion is that the 57 NVT ratio is relatively cheap, so the price of bitcoin is rising.
Since then, bitcoin prices have soared to nearly $20 thousand, but then fell sharply. In the 11 month 19 day trading, bitcoin prices fell nearly $700, slightly lower than the $4800. At the same time, the NVT ratio continues to rise. A week ago, the NVT ratio of 160 times, three times a year ago, although bitcoin prices fell by 20%. The 19 day after the fall, bitcoin NVT ratio fell to 90, while prices fell a lot, but the NVT ratio is still far higher than a year ago. Bitcoin will return to a year ago, the “value”, the need for further down 37%, to around $3000. However, due to the use of the scope as a practical means of payment is shrinking, rather than expand, perhaps the NVT ratio should be less than a year ago, which means that bitcoin prices should fall further.
A year ago, bitcoin daily average turnover of about $2 billion 100 million. Today, bitcoin’s seven day average trading volume is less than half the number of recent minimum $350 million, 80% lower than a year ago. Bitcoin may have lost its luster, but it is more likely that the huge volume of transactions of digital began is not real. It is likely that by investor enthusiasm trading up, does not mean that people have begun to accept bitcoin, will increasingly use it to buy and sell goods. In addition, it is entirely unclear whether bitcoin should increase in frequency because of the use of more value. As economic activity heats up, the dollar did indeed will be the case, but may be more interest, rather than the amount of the transaction related.
There is a further decline in space at the same time indicates that the NVT ratio in the bitcoin price, part of the bitcoin fans have noticed other indicators. Study on the mechanism of bitcoin bulls, the well-known Fundstrat Global Advisors LLC co-founder and chief strategist Thomas Lee (Thomas Lee) recently bitcoin price target from $25 thousand down to $15 thousand. A multiple reference adjustment is expected to he believes bitcoin mining costs, rather than according to the transaction amount. When the mining cost is lower than the currency price, people will not stop digging money, but it is unclear if this situation in turn is established.
There are some people pointed out that the price of bitcoin has been far lower than earlier this year, it is a buying opportunity. If bitcoin price at $20 thousand when you love it, then to $5000 and you will love it. This flawed investment logic may let you have a call, until the price return to zero.
This article is for reference only! Don’t make any absolute basis.