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RE: Remember Hive!

in #hive3 years ago (edited)

I recently came across an interesting method another trader used to determine the FMV of bitcoin based upon the number of active wallets which held more than 0.01 BTC and a variant of Metcalfe's Law. Ideally, the value would provide the non-speculative value of one token (think M sub 0 when looking at monetary veloicty reports from places like the FED). So far it has accurately predicted the bottom twice in the two most recent pullbacks of BTC. I'd be curious to see if a variant could be used for HIVE as well.

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I have actually had a similar trail of thought with this and its interesting you bring it up. I'll work at it with holdo and and see what we can come up with. Do you have any sources for their method?

My source happens to be one of two of the absolute best traders (in my opinion) I follow in the Bitcoinmarkets Subreddit (u/aa09455d). The method (in his words) based upon his March 12th comment is as follows:

It has been my theory for a while that the a hard floor for the Bitcoin price is one that results from pure hodler support and thus stripped of support from speculative holding.

I derive this by looking at past cycle bottoms and then applying a factor that is the square of the proportional increase since then of wallets with meaningful balance (> 0.01 BTC).

This methodology quite accurately projected 3k in Dec 2018 from the $190 in Jan 2015. If we further apply this to now, that gives a number of $4.8K.

Price as of Dec 2018 = $3,128

Addresses in Dec 2018 with balance > 0.01 BTC = 6.41 million.

Addresses now with balance > 0.01 BTC = 7.93 million

$3,128 * (7.93/6.41)^2 = $4,800

I think this is useful information under current circumstances as otherwise Bitcoin only touches this kind of floor about once each cycle and I certainly didn't expect reaching a price with no speculative support two months before halving. But one has got to be in tune with times.

When I last used this method in April, the theoretical floor of Bitcoin (based on this Metcalfe's variant) was $5,100. I'd be curious to see what it spits out now. I'd also be curious to see how this could be applied to HIVE and some other cryptocurrencies I trade.