Bitcoin price LIVE: Economists discover true 'value' of $8k Bitcoin - a lowly $20
BITCOIN is holding its head above the $8,000 line and wallet holders will hope that it continues north as confidence returns. However, two economists have surprised the crypto community after using a 1911 theory to claim that BTC's true value is just $20.
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11.48am - UPDATE - Wine buddies work out BTC's true value
Bloomberg report on how it took two economists one three-course meal and two bottles of wine to calculate the fair value of one Bitcoin.
The price they arrived at - just $20. The pair named this the 'Côtes du Rhône theory' for Bticoin's true value.
In summary, Bloomberg reveal how Savvas Savouri, a partner at a London hedge fund and Richard Jackman, professor emeritus at the London School of Economics set about how best to establish the value of a cryptocurrency made of code with no country enforcing it, no central bank controlling it, and few places to spend it?
Lionel Laurent writes: "Is it $2, $20,000, or $2 million? Can one try to grasp at rational analysis, or is this just the madness of crowds?"
The pair drew on a theory holds that the price of money is linked to its supply and how often it’s used.
The report said: "By knowing a money’s total supply, its velocity—the rate at which people use each coin—and the amount of goods and services on which it’s spent, you should be able to calculate price.
"Estimating Bitcoin’s supply at about 15 million coins - it’s currently a bit more - and assuming each one is used an average of about four times a year, led Jackman and Savouri to calculate that 60 million Bitcoin payments were supporting their assumed $1.2 billion worth of total U.S. dollar-denominated purchases.
"Using the theory popularised by Irving Fisher and his followers, you can—simplifying things somewhat—divide the $1.2 billion by the 60 million Bitcoin payments to get the price of Bitcoin in dollars. That’s $20."
Ouch.
10.30am - UPDATE - BTC hits $8,200
Slim gains of $32 on the day so far.
9.05am - UPDATE - Is the worst over for BTC?
CNBC report that Dan Morehead, CEO of Pantera Capital, claims the digital currency has been growing at 165 percent per year in the five years the firm has been in business.
Mr Morehead told CNBC's "Fast Money" Wednesday. "When it does, it's a very good time to buy.
"Something that's growing that fast hardly ever gets below its 200-day moving average."
8.30am - HEADLINES
As the debate over the arrival of institutional rumbles on, Benjamin Dives CEO of The London Block Exchange (LBX) has told Express.co.uk that there has veen a marked increase in his firm's handling of - Bitcoin, Ethereum, Litecoin and Ripple, paired with GBP, USD and EUR - across the board.
He said: "The common assumption is that institutional investors shy away from new asset classes such as cryptocurrency.
"However, that’s not what we are seeing here at LBX; we've seen a huge uplift in institutional interest recently. Since Q1 2018, we're now handling many millions in trades each month.
“From hedge funds to pension funds, institutional investors are taking cryptocurrency seriously.
"At LBX, institutional investors have had access to our over-the-counter desk for some time, which allows investors to trade cryptocurrencies under preferential conditions for high volume orders."
Updates below throughout the day....