Market Commentary von Patrick Heusser, Crypto Finance AG
Good Morning!
After listening to Warren Buffett speak at Berkshire Hathaway's annual meeting, I thought it was time to start looking out for reports attempting to valuate tokens/coins with a "running" business. For all of you who did not listen to this, one of Buffett's statements was that he does not know of any worthwhile investments (companies to buy) at the moment.
Stock-to-flow model sees prices of up to 250k
In the crypto space, bitcoin has a prominent valuation model called S2F (Stock-to-Flow). It pictures a steady upmove on a long-term chart with prices in the region of 250k per bitcoin over the next 5-10 years (depending on which version of the model you look at).
I read a report on the MKR token, which I find very interesting in its approach: trying to link the total market cap of the calculated NPV (net present value) on the back of MKR's business model.
I highly recommend you read this report and form your own opinion.
Nobody knows the course of future cash flows
My conclusion is that MKR (currently with a market cap of roughly $350 million) is highly overvalued. I fully agree that you could also say the same about TESLA or AMAZON shares, which are currently priced at a P/E ratio of 189 and 110, respectively. But as we all know, the stock price is built on future cashflows/earnings discounted at current interest rates. Since nobody knows what the future cashflows will be there is a great deal of fantasising and envisioning prices of stock valuations.
Most likely, this is similar to most of the cryptocurrency tokens and coins. In the report, the analyst also points out that, e.g. if in the future properties could be pledged as collateral into your MKR vault, this would increase the DAI circulation by billions of USD.
But as I said... I recommend you have a readthrough: MakerDao fundamental analysis.
