IOBC Report: From DeFi to Bitcoin, Exploring Crypto Asset Valuation Models

Crypto Has Become One of the Most Dynamic and Promising Sectors in Financial Technology. With the Influx of Institutional Funds, Reasonably Valuing Crypto Projects Has Become a Critical Issue. Traditional Financial Assets Have Mature Valuation Systems, Such as Discounted Cash Flow (DCF) Model and Price-to-Earnings (P/E) Ratio. Crypto Projects Are Diverse, Including Public Chains, CEX Platform Tokens, DeFi Projects, MEME Coins, etc., Each with Unique Characteristics, Economic Models, and Token Utilities. There Is a Need to Explore Valuation Models Tailored to Different Tracks. [The rest of the translation follows the same professional and precise approach, maintaining the technical terminology and structure of the original text.]

According to statistics, in the past five years, Bitcoin's price has been below the mining cost of mainstream mining machines for only about 10% of the time, which fully demonstrates the important role of mining costs in supporting Bitcoin's price.

Therefore, Bitcoin mining costs can be viewed as the price floor for Bitcoin. Bitcoin's price has been below the mining cost of mainstream mining machines only a few times, and from past experience, these times have been excellent investment opportunities.

Gold Substitute Model

Bitcoin is often viewed as "digital gold", capable of replacing part of gold's "value storage" function. Currently, Bitcoin's market value accounts for 7.3% of gold's market value. If this proportion were to increase to 10%, 15%, 33%, and 100% respectively, the corresponding Bitcoin price would reach $92,523, $138,784, $305,325, and $925,226. This model, based on the analogy of their value storage attributes, provides a macro reference perspective for Bitcoin valuation.

However, Bitcoin and gold still differ significantly in physical properties, market perception, and application scenarios. Gold has been a globally recognized safe-haven asset for thousands of years, with extensive industrial uses and physical backing; while Bitcoin is a virtual asset based on blockchain technology, with its value more derived from market consensus and technological innovation. Therefore, when applying this model, these differences' impact on Bitcoin's actual value must be fully considered.

Summary

This article aims to advocate finding valuation models for Crypto projects to promote the stable development of valuable projects in the industry and attract more institutional investors to allocate crypto assets.

Especially during a bear market, we must use the strictest standards and most straightforward logic to find projects with long-term value. Through reasonable valuation models, just like capturing Google and Apple during the "bubble burst" in 2000, we can unearth the "Google and Apple" in the Crypto field during a bear market.