Raphael Zagury, CIO at Swan Bitcoin, has developed a new model to calculate a fair price for Bitcoin. He calls it Schrödinger’s Coin Model and bases this valuation on the concept that Bitcoin is a store of value that has the potential to demonetize all other assets. By flooding the currency market and degrading the value of money, central banks have encouraged investors to move into financial instruments as their primary stores of value. These premiums have led to assets, including real estate, being priced far above their utility value.

The Schrödinger’s Coin Model looks at asset classes and uses probabilities for when and how much share Bitcoin will take from each asset class. It is based on the concept of quantum superposition and has two possible outcomes: it either fails, rendering it of no value, or it captures the monetary premium of traditional stores of value. The base case assumes that 60% of gold’s market capitalization is due to monetisation, leading to a bitcoin price of $87,000. When other asset classes are taken into account, and an intertemporal discount rate of 12.5% is considered, this results in a present value of $379,823.

In the most bullish scenario, Bitcoin could reach a price of over $3 million per coin. Sam Callahan, lead analyst at Swan, commented on the model: he believes that Bitcoin’s adoption won’t happen overnight, but rather as more people learn about it and begin to value it over time. At present, the BTC price is struggling to find support after another failed attempt to overcome the resistance area at $28,600.

With Zagury’s new model, investors have an improved set of data to help them determine if they should invest in bitcoin and what a fair value for the cryptocurrency is. By demonetizing other traditional stores of value and a potential increase in price of over $3 million, this model shows that Bitcoin may remain a compelling store of value for years to come.



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