Checking in on Bitcoin’s Fair Value

March 27, 2025 | Nic Solecki, CBDA, Client Analyst

In May of 2024, we published a Chart of the Week titled “Is Bitcoin Fairly Valued?” At the time, bitcoin and the broader digital asset space demonstrated mixed performance amid heightened market volatility, shifting liquidity conditions, and geoeconomic uncertainty. Recognizing the challenges in determining bitcoin’s fair value, we applied standard valuation principles to estimate bitcoin’s fundamental value at that time. While bitcoin and the broader digital asset space have once again exhibited mixed performance amid a shifting macroeconomic backdrop, much has changed over the last year and recent developments suggest that a reassessment of bitcoin’s fair value could be timely.

To better understand why this reassessment could be relevant for institutional investors, here is a brief and non-exhaustive recap of the key developments in the U.S. crypto space this year:

On January 23, the Trump administration issued Executive Order (EO) 14178, Strengthening American Leadership in Digital Financial Technology, signaling a new approach to digital assets and revoking the frameworks and directives established by the Biden administration.
• Within 180 days, the President’s Working Group on Digital Asset Markets, currently chaired by David Sacks, will evaluate and recommend proposals for a federal framework to govern the issuance and operation of digital assets.
On February 5, FDIC Acting Chair Travis Hill and Federal Reserve Governor Michelle Bowman released statements signaling the ongoing reassessment of their organizations’ postures toward the crypto industry — sentiments echoed in recent weeks by officials from the Treasury, DOJ, and SEC.
On March 6, President Trump signed the EO to establish a U.S. Strategic Bitcoin Reserve and a separate Digital Asset Stockpile; both to be administered and maintained by the Department of the Treasury.
• Both are to be initially funded with assets seized or forfeited in criminal and civil cases.
• Without further executive or legislative action, additional Stockpile assets can only be acquired through forfeiture proceedings and civil money penalties imposed by a government agency.
• The Secretary of the Treasury and the Secretary of Commerce may develop budget-neutral strategies for acquiring additional bitcoin.
As of March 24, 20 states have active legislation advancing the establishment of digital asset reserve funds or diversification of existing public funds with prominent digital assets — with some proposals specifying potential allocations up to 10% of fund assets.

Unsurprisingly, crypto markets responded enthusiastically to the news. By the end of January, the MVDA 10 Index and the MSCI Global Digital Asset Index were both up roughly 10% as bitcoin traded north of $100,000. Then, February arrived, bringing a notable shift in broad market sentiment and volatility, causing digital asset prices to fall alongside public equities. By the end of February, bitcoin was down roughly 18% while some broad crypto indices were down as much as 28%. So where does bitcoin currently stand?

Applying the discounted cash flow (DCF) method used in our prior analysis, bitcoin’s fair relative value range¹ is illustrated above in light teal, with its upper and lower bounds highlighted, respectively, in orange and green. While bitcoin appears to have closed February at undervalued levels, as of March 24, bitcoin appears to be slightly below and advancing toward its fair value range. That said, it is important to clarify that this point-in-time DCF method is just one of several potential valuation approaches, and other estimates may vary. Valuations for both floating fiat currencies and cryptocurrencies are dynamic, constantly adjusting to inflation, nominal yields, and broader macroeconomic conditions. Going forward, future inflation trends and market dynamics will provide further opportunities to validate this fundamental approach.

¹The discounted terminal values of bitcoin are based on a discounted cash flow model that incorporates U.S. Treasury yields, inflation rates, and imputed risk premiums.

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