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2018 was a very difficult year for Bitcoin (BTC) and virtual currencies. Bitcoin has lost about 80% of its value from its historical high and other altcoins have lost more than 90%. However, there is a venture capitalist who proves it Bitcoin and Ethereum they are currently oversold from a fundamental point of view.
Bitcoin and Ethereum (ETH) have experienced wild fluctuations of their price during the last few weeks. Bitcoin peaked at $ 3,300 and Ethereum traded near $ 83. Both marked the New Year lows. Because of this negative situation the whole market is experiencing, analysts are not particularly optimistic about the future of space.
Despite this, Chris Burniske, a member of the New York venture capital's Placeholder, appears to be more optimistic about the price of these virtual currencies. In a post published on December 9th, he states that the fundamentals of quality cryptography networks are lower than prices.
In order to determine the value of a specific network, it has aggregated different characteristics of both. For Bitcoin, it used the number of daily transactions, the estimated daily value of the transaction and the unique daily addresses used. For Ethereum he used the number of daily transactions and the gas used by the network.
He went on to explain that Bitcoin is processing around 250,000 transactions a day and Ethereum 500,000. He stated that both graphs show a clear divergence in which the value of the network continues to flow but the daily transactions remain stable. On this he wrote:
"From the peak, the network values of Bitcoin and Ethereum are down respectively by 81% and 93%, while the daily number of transactions is only down by 41% and 52% respectively."
Burniske shows that both Ethereum and Bitcoin are oversold. He says the charts show that Bitcoin is changing value and Ethereum is processing smart contract calculations.
Their network values decreased respectively by 81% and 93%, but the demand for their functionality decreased by 74% and 7% respectively.
"Bitcoin continues to process over $ 1 billion worth of transaction value on a regular basis every day, and it's clear how tightly the orange line of this fundamental is coupled with the price," he wrote. "Meanwhile, developers and consumers who use Ethereum's smart contracts continue largely unabated, as evidenced by another divergence between this fundamental value and the value of the network."
He then compared the frequency of the network with the value of the network. Burniske says so Bitcoin and Ethereum & # 39; s hash rates are higher now than when they reached the peak. This fundamental is still exceeding the price.
He concluded the article by saying that there are no clear models used for virtual currencies and how to quantify the fundamentals behind them. Furthermore, he stressed that there is no such thing as the "Bloomberg of Crypto" to collect data and information.
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