Determining The True Value of Cryptocurrencies

The cryptocurrency sector is a fast-growing industry. Cryptocurrencies like Bitcoin, Ethereum, and other altcoins are experiencing unprecedented adoption rates across the world. However, what determines the true value of these is an enigma for most users. Many falsely believe that cryptocurrencies are like fiat currencies and lack intrinsic value. Therefore, the users must understand the actual values of cryptocurrencies and study market trends affecting them.

Evaluation of Crypto Assets

The evaluation of crypto assets such as Bitcoin, Ethereum, and other altcoins varies considerably. Therefore, the lens of evaluation needs a considerable amount of calibration. Bitcoin operates as an application-specific blockchain and facilitates value transfer across the net. Ethereum is a general-purpose blockchain and enables the development of decentralized applications. The fundamental value of Bitcoin is linked with its inflationary hedger and has safeguards against monetary devaluation. Ethereum’s value on the other hand originates from its ability to generate network fees and platforms. 

True Value of Bitcoin

Bitcoin has a fixed supply of 21 million coins. The value proposition is straightforward and has periodic halving events. These events typically occur after every 4 years and reduce the supply of new Bitcoin. During halving events, the prices of Bitcoin rise if the demand conditions are stable. 

True Value of Ethereum

Ethereum symbolizes the category of cryptocurrencies that facilitate the creation of various applications that generate transaction fees. Protocol economy is what Franklin Templeton has analyzed about Ethereum. Their report highlights that this cryptocurrency generates cash flow and has substantial fee generation. There is a 44% decline in fees due to different levels of network usage. A portion of these fees is given to validators and the remainder is utilized. Thus, Ethereum unlike Bitcoin experiences upward pressure as far as price is concerned. 

Tools For Crypto Valuation

CoinGecko

CoinGecko is the most useful tool for crypto valuation. The friendly interface is the preferred choice as it lists out the rank of cryptocurrencies based on market capitalization. For new users, top rankings by CoinGecko give a rough idea about the value of cryptocurrencies in the market. This approach is free from complications and is similar to distinguishing small-capital equities from blue-chip equities. 

Token Supply

The true value of cryptocurrencies is often linked with the token supply. Apart from Bitcoin, most tokens have initial investors that hold a significant amount of share for subjects. Token Unlocks is a tool that helps in analyzing the prices due to increased supply. It considers several factors such as trade volume, magnitude, and the overall impact of token prices. 

Defi Llama 

The total value locked (TVL) can be checked by using DeFi Llama. This tool denotes confidence in a protocol or a particular chain, in the same manner as banks collect deposits as a matter of trust. It also has various features such as protocols in TVL, number of addresses, and timeframes. It also has a 24-hour fee for generating data. 

Also Read-  Advantages of Direct Market Access in Crypto Trading

Bottom Line

The true value of cryptocurrencies is no longer a riddle. The common users can significantly estimate their cryptocurrency’s value. However, it is still easier to estimate the value of well-known cryptos like Bitcoin, Ethereum, and other known altcoins. To find out intrinsic value, powerful tools are necessary, and crypto investors should be well aware of market factors and capitalize on new opportunities.