New Bitcoin Price Model Predicts Fair Price of at Least $379,823


A new BTC pricing model created by Raphael Zagury, chief investment officer at Swan Bitcoin, currently determines a fair price in a base case of $387,823. In his Schrödinger’s Coin Model, Zagury bases the price of Bitcoin on the idea that it will demonetize all other assets because it is a store of value.

Bitcoin Price Undervalued by at Least 13 Fold

Inspired by “Bitcoin as Property” by According to Michael Saylor, the model determines the likelihood that Bitcoin will take the monetary premium from conventional assets, causing a change in capital allocation and a reevaluation of their value.

It postulates that the global expansion of the money supply by central banks has resulted in the fundamental destruction of money and a capital flight by investors into financial products like stocks, real estate, and exchange-traded funds (ETFs) as their primary stores of value.

Investors are now looking for protection from the harmful effects of money printing as a result of central banks being overrun with excess currency and fundamentally destroying the value of money. As a result of this phenomenon, the economy has become highly financialized.

According to Zagury, these premiums have the effect of pricing many of these assets, including real estate, significantly higher than their utility value. By demonetizing the aforementioned conventional stores of value, the analyst claims that Bitcoin has the potential to profit from this and turn into the premium asset.

The model examines the main asset classes and makes use of probabilities for when and how much of a share Bitcoin can take from each asset class in order to determine its fair value. There is also a time value added.

Additionally, the Schrödinger’s Coin model is based on the idea of quantum superposition, in which Bitcoin has two potential outcomes. “It either fails and is worthless (Dan Peña scenario) or captures the monetary premium of traditional stores of value (Saylor scenario),” the analyst states.

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How is the Base Scenario Calculated?

The value of demonetization by Bitcoin for each scenario is determined based on the parameters for each asset class and then added together.

The underlying assumption is that monetization, rather than utility, accounts for 60% of gold’s market capitalization. With a market cap of $10 trillion and a 70% likelihood that gold will be demonetized, this yields a price for bitcoin of $87,000.

New Bitcoin Price Model Predicts Fair Price of at Least $379,823

The base case yields a Bitcoin present value of $379,823 when the other asset classes are now included and an intertemporal discount rate of 12.5% is taken into account. The parameters of demonetization that follow, as seen in the image below, form the basis of the base case.

New Bitcoin Price Model Predicts Fair Price of at Least $379,823

BTC could reach a price of more than $3 million per coin in the most bullish scenario. “In terms of expected value, here’s the path to HyperBitcoinization as this scenario plays out; leading to a Bitcoin price of +$3mm in 20 years,” Zagury writes.

The interface Zagury is presently working on to enable Bitcoiners to determine a reasonable Bitcoin price by using their own assumptions and probabilities is depicted in the gif below.

Sam Callahan, lead analyst at Swan commented on the modell:

The widespread use of bitcoin won’t occur overnight. As more people become aware of it and start to value it over time, it becomes a game of probabilities. Due to its superior monetary properties, it will eventually demonetize other assets; however, as of right now, it is underappreciated and therefore undervalued.

The price of bitcoin was $27,912 at the time of publication. The BTC price is currently struggling to find support following yet another failed attempt to pass through the $28,600 resistance zone.

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