Bitcoin Valuation. Store of Value and Investment Diversification
DOI:
https://doi.org/10.46661/rev.metodoscuant.econ.empresa.10870Keywords:
Blockchain, valuation, gold, Bitcoin, cryptocurrencyAbstract
Bitcoin has emerged as a disruptive monetary asset, sparking debates regarding its valuation, its capacity as a store of value, and its suitability for portfolio diversification. However, it faces significant challenges due to its extreme volatility, lack of regulation, and decentralized nature. This study addresses three key questions: (1) the valuation outcomes derived from applying different methodologies, (2) its role as a tool for portfolio diversification, and (3) its feasibility as a store of value.
The methodology included a comparative analysis of valuation approaches, utilizing data from sources such as CoinMetrics, CoinMarketCap, and Blockchain.com. Pearson's correlation coefficient was employed to assess its diversification potential, while the Stock-to-Flow model was applied to evaluate its capacity as a store of value based on its digital scarcity.
Findings reveal disparities in valuation results depending on the methodologies applied to this cryptocurrency, highlighting its speculative nature. Bitcoin demonstrates potential as a risk diversifier due to its low correlation with traditional assets under specific conditions. However, its role as a store of value is constrained by inherent volatility, the absence of regulatory consensus, and susceptibility to external shocks.
Although institutional adoption of Bitcoin has increased, as evidenced by the development of spot Bitcoin ETFs, these risks diminish its viability as a primary asset in diversified portfolios and as a sustainable store of value. Further research is required to address these limitations and evaluate their impact on Bitcoin’s establishment as a global and functional financial investment in the long term.
Downloads
References
Alabi, K. (2017). Digital blockchain networks appear to be following Metcalfe's Law; Electronic Commerce Research and Applications; Volume 24; julio-agosto; pags. 23-29.
https://doi.org/10.1016/j.elerap.2017.06.003
Bakhtiar, T., Luo, X., y Adelopo, I. (2023). Network effects and store-of-value features in the cryptocurrency market; Technology in Society; 74; 102320. https://doi.org/10.1016/j.techsoc.2023.102320.
Baur, D. G., y Dimpfl, T. (2021). The volatility of Bitcoin and its role as a medium of exchange and a store of value; Empirical Economics; 61(5); pags. 2663-2683. https://doi.org/10.1007/s00181-020-01990-5.
Burniske, C. (2017). Cryptoasset Valuations; Medium Article. Disponible en: https://medium.com/@cburniske/cryptoasset-valuations-ac83479ffca7
Chan, W. H., Le, M., y Wu, Y. W. (2019). Holding Bitcoin longer: The dynamic hedging abilities of Bitcoin; The Quarterly Review of Economics and Finance; 71; pags. 107-113.
https://doi.org/10.1016/j.qref.2018.07.004
Dyhrberg, A.H. (2016). Bitcoin, gold and the dollar-A GARCH volatility analysis. Finance Research Letters, 2016, vol. 16, p. 85-92. https://doi.org/10.1016/j.frl.2015.10.008
Fernández, P. L. y López, P. L. (2020). ¿Cómo valorar los denominados criptoactivos? Cuadernos de Información Económica, Nº 277, p. 71-80. https://www.funcas.es/articulos/como-valorar-los-denominados-criptoactivos/
Fidelity Digital Assets (2024a). Bitcoin as an Aspirational Store of Value Revisited; Fidelity Digital Assets; Research Study; Febrero; 20.
Fidelity Digital Assets (2024b). Bitcoin's evolving role as an alternative investment. Understanding where Bicoin can fit a portfolio; Fidelity Digital Assets; Research Study; Octubre.
Fisher, I. (1912). The Purchasing Power of money: its determination and relation to credit interest and crises; Macmillan Company; 1912.
Gray, D. (2023). Bitcoin. Keeping Proof of Work Decentralized; Fidelity Digital Assets; Research Study; Marzo; 30.
Guesmi, K., Saadi, S., Abid, I., y Ftiti, Z. (2019). Portfolio diversification with virtual currency: Evidence from bitcoin; International Review of Financial Analysis; 63; pags. 431-437.
https://doi.org/10.1016/j.irfa.2018.03.004
Hughes, A., Park, A., Kietzmann, J., & Archer-Brown, C. (2019). Beyond Bitcoin: What blockchain and distributed ledger technologies mean for firms; Business Horizons; 62(3); pags. 273-281.
https://doi.org/10.1016/j.bushor.2019.01.002
Janson, N., y Karoubi, B. (2021). The Bitcoin: to be or not to be a Real Currency?; The Quarterly Review of Economics and Finance; 82; pags. 312-319. https://doi.org/10.1016/j.qref.2021.09.005.
Kristoufek, L. (2023). Will Bitcoin ever become less volatile?; Finance Research Letters; 51; 103353.
https://doi.org/10.1016/j.frl.2022.103353
Kubát, M. (2015). Virtual currency bitcoin in the scope of money definition and store of value; Procedia Economics and Finance; 30; pags.409-416. https://doi.org/10.1016/S2212-5671(15)01308-8.
Kuiper, C. y Hogan. M. (2023). Understanding Proof-of-Work; Fidelity Digital Assets; Research Study; Noviembre.
Li, J. P., Naqvi, B., Rizvi, S. K. A., y Chang, H. L. (2021). Bitcoin: The biggest financial innovation of fourth industrial revolution and a portfolio's efficiency booster; Technological Forecasting and Social Change; 162; 120383. https://doi.org/10.1016/j.techfore.2020.120383.
Mahmudov, M. and Puell, D. (2028). Bitcoin Market-Value-to-Realized-Value (MVRV) Ratio. Introducing Realized Cap to BTC Market Cycle Analysis; Medium. Disponible en: https://medium.com/@kenoshaking/bitcoin-market-value-to-realized-value-mvrv-ratio-3ebc914dbaee.
Metcalfe B. (1995). Metcalfe's Law: A network becomes more valuable as it reaches more users; Infoworld; Octubre 2.
Metcalfe, B. (2006). Guest Blogger Bob Metcalfe: Metcalfe's Law Recurses Down the Long Tail of Social Networks; VC Mike's Blog; Vol. 18; Agosto.
Metcalfe, B. (2013). Metcalfe's Law after 40 Years of Ethernet; Computer; Vol. 46; No. 12; pags. 26-31.
https://doi.org/10.1109/MC.2013.374
Moreno, I.S. (2024). Bitcoin y tipos de interés; Forbes; España; Forbes Fund; Noviembre; 2024.
Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system; Decentralized business review. Disponible en: https://bitcoin.org/bitcoin
Neureuter, J. (2022). Valuing Bitcoin. Modeling the price of bitcoin as a monetary asset through market forces; Fidelity Digital Assets; Research Study; Mayo, 30.
Peterson, T. F. (2018). Metcalfe's Law as a Model for Bitcoin's Value; Alternative Investment Analyst Review; Q2 2018; Vol. 7; No. 2, pags. 9-18.
https://doi.org/10.2139/ssrn.3078248
Plan B (2019). Modeling Bitcoin Value with Scarcity. Disponible en: https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25
Sapra, N., Shaikh, I., y Dash, A. (2023). Impact of proof of work (PoW)-based blockchain applications on the environment: A systematic review and research agenda; Journal of Risk and Financial Management; 16(4); 218. https://doi.org/10.3390/jrfm16040218.
Soni, U., y Preece, R. (2023). Valuation of Cryptoassets: A Guide for Investment Professionals (Executive Summary); CFA Institute Research and Policy Center; Noviembre.
https://doi.org/10.56227/23.1.24
Valverde, S. C., y Fernández, F. R. (2018). Economía de los criptoactivos: mitos, realidades y oportunidades; Cuadernos de Información económica, (264), pags. 1-13.
Vojtko, R., y Javorská, J. (2024). How Much Bitcoin Should We Allocate to the Portfolio. Disponible en SSRN 4752607.
https://doi.org/10.2139/ssrn.4752607
Vujičić, D., Jagodić, D., & Ranđić, S. (2018). Blockchain technology, bitcoin, and Ethereum: A brief overview; 2018 17th international symposium infoteh-jahorina (infoteh); pags; 1-6; IEEE, Marzo.
https://doi.org/10.1109/INFOTEH.2018.8345547
Wei, W. C., y Yiu, B. (2018). An Equilibrium Crypto-Token Valuation Model. Disponible en: SSRN 3275062.
https://doi.org/10.2139/ssrn.3275062
Woo, W. (2017). Introducing NVT Ratio (Bitcoin's PE Ratio); Use it to Detect Bubbles. Disponible en: https://woobull.com/introducing-nvt-ratio-bitcoins-pe-ratio-use-it-to-detect-bubbles/
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Ismael Santiago Moreno
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Submission of manuscripts implies that the work described has not been published before (except in the form of an abstract or as part of thesis), that it is not under consideration for publication elsewhere and that, in case of acceptance, the authors agree to automatic transfer of the copyright to the Journal for its publication and dissemination. Authors retain the authors' right to use and share the article according to a personal or instutional use or scholarly sharing purposes; in addition, they retain patent, trademark and other intellectual property rights (including research data).
All the articles are published in the Journal under the Creative Commons license CC-BY-SA (Attribution-ShareAlike). It is allowed a commercial use of the work (always including the author attribution) and other derivative works, which must be released under the same license as the original work.
Up to Volume 21, this Journal has been licensing the articles under the Creative Commons license CC-BY-SA 3.0 ES. Starting from Volume 22, the Creative Commons license CC-BY-SA 4.0 is used.
