Even casual crypto observers are aware of the dramatic downward price action across the crypto space over the past few weeks. This price action has market participants weighing in with opinions regarding where the crypto market stands: on the cusp of a short consolidation and follow-on breakout, or has the next cyclical crypto winter made an early appearance? Long-time crypto traders, analysts, and investors have seen dramatic price drops in the past, and so the
While Bitcoin is undoubtedly the most recognized crypto currency in the world, there are literally thousands of other cryptos in existence. While we tend to call everything in the crypto space “cryptocurrencies”, this is misleading because the only thing these digital assets have in common is that they have issued tokens that power their own platforms. In the crypto space, there are four kinds of assets: Cryptocurrencies: coins such as Bitcoin are intended to compete
If Bitcoin and other cryptocurrencies were to disappear tomorrow, what legacy would they leave behind? I can think of three main impacts: First, Bitcoin raised awareness of the flaws in fiat money, the superiority of sound money, and the potential of people to trade with each other without third-party intermediaries. Second, Bitcoin has provided a life raft to millions of people under regimes suffering hyperinflation (like Venezuela), confiscation (like India), or currency export controls (like
Bitcoin can seem like the merger of the Wild West and the Jetsons. If you aren’t already an expert, keeping away might seem safer. Fortunately, Vellum Capital prepared a whitepaper that makes sense of the cryptocurrency space without being technical or sensational. Get the complete whitepaper: “Speculation Becomes Consensus Bitcoins Rise And The Coming Crypto Economy“
In November of 2020, we posted an article that looked at whether Bitcoin was poised to push past the $20,000 barrier. Entitled, “Will Bitcoin Go Over $20K to Reach a New ATH,” that article is worth exploring again several months later as we look to gain some perspective on where things now stand not just with Bitcoin, but in the broader crypto market. In that article, we proposed that Bitcoin’s value proposition is based on
Will Bitcoin go over $20,000 and reach all-time new highs by December 2020? Here’s a quick guide for investors to know what’s happening now: The first question: does Bitcoin over 19,000USD represent a new thesis or outlook for the market? No. As for nearly all digital assets, Bitcoin’s value is established from a ‘stack’ of value propositions. This includes: Store of Value Intermediary of Exchange (to act as a currency) Source of Dependable Liquidity Limited
This week the United States economy reported an additional 4+ million people filing for unemployment. The cost of COVID19 lockdowns and their destabilizing effect in business is an economic wave unlike anything in our lifetimes. This extraordinary investment environment has also provided tremendous qualitative indication and information about the market’s current assessment of Bitcoin and cryptocurrencies in general. At Vellum Capital, we want to share the most important observations we've studied over the past three months:
There are valid reasons to criticize Bitcoin, but price volatility is not one of them. Why does the price of Bitcoin change so much from day to day? The answer is simple: the value of Bitcoin derives almost entirely from speculation on future adoption of Bitcoin rather than practical use. Bitcoin speculators are betting on the likelihood that Bitcoin will become offers a credible alternative to fiat paper money or commodities like gold. No one knows the
Forbes Magazine featured Vellum Managing Partner Eric Kovalak in “Here’s What Investors Need To Know About Cryptocurrency“: Crypto Valuation = Philosophy + Technology? Eric Kovalak, a managing partner for Vellum Capital, a hedge fund management firm specializing in crypto assets, says, “People are trying to translate the value of cryptocurrencies into a traditional model where they’d use something like P/E.” While there is a calculation called NVT Ratio (i.e., network value to transactions ratio) that
What is the real market value of cryptocurrencies like Bitcoin? The numbers used to explain the performance of Bitcoin and other cryptocurrencies are less meaningful than most assume. Cryptocurrencies are not exactly like stocks, and cryptocurrency exchanges do not work like traditional securities markets. As a result, many crypto-asset investment strategies based on conventional definitions of market share, capitalization, volatility, and trading volume are deeply flawed. Misleading numbers mean that cryptocurrency valuation and adoption is
