Why traditional valuation methods fail

Determining the fair value of bitcoin continues to pose challenges for investors. Unlike traditional financial instruments such as stocks or bonds, bitcoin lacks classic valuation metrics such as cash flows, dividends, or interest payments.

This means that there are no established financial metrics such as the price-earnings ratio (P/E ratio) that can be used for a fundamental valuation. Bitcoin is a non-income-generating asset and therefore eludes the methods economists use to determine the “true value” of an asset.

Gold as a benchmark? Only partly accurate

Bitcoin is often referred to as “digital gold” because like gold, it is in short supply – with a fixed upper limit of 21 million coins, it is even absolutely limited. Given its limited supply, one might expect bitcoin’s price dynamics to mirror those of gold. However, the data tell a different story: the long-term correlation between bitcoin and gold is weak.

_{Source: Maerki Baumann, own calculations}

Regression analyses confirm that classic macroeconomic factors such as real interest rates or the U.S. Dollar Index (DXY) only have a weak influence on bitcoin. 

_{Source: Maerki Baumann, own calculations}

Models such as the Stock‑to‑Flow‑Modell (S2F), the US Dollar Index (DXY) or the Global Monetary Supply (M2) may fit the bitcoin narrative, but the data show they do not hold up empirically. They are therefore not suitable for pricing bitcoin.

Bitcoin: a “risk‑on” asset

Are we completely in the dark? Not entirely. The data reveal a clear correlation between bitcoin and stock indices such as the Nasdaq or the S&P 500 and even stronger with growth-driven small-cap stocks such as the Russell 2000 Index.

Bitcoin thus behaves like a classic “risk-on” asset: it performs above average during periods of high market liquidity and elevated risk appetite. Consequently, investors may find bitcoin particularly attractive in risk-on market conditions.

_{Source: Maerki Baumann, own calculations}

Macro analysis: a top-down view

Before attempting to determine bitcoin’s fair value, it is worth considering the macroeconomic environment, as it offers insights into market participants’ willingness to invest. Key factors to consider, among others:

• Is global liquidity trending up or down?
• How is the Treasury General Account (TGA), the U.S. government’s “bank account”, evolving?
• Is the U.S. dollar currently strong or weak?
• Is the banking sector expanding credit, or is it tightening?
• How high is volatility in the bond market (MOVE Index)?
• Is corporate earnings growth holding steady?

Technical analysis: the RSI as a reliable leading indicator

In addition to the macro perspective, a technical analysis offers insights into short-term bitcoin price movements. A key metric is the Relative Strength Index (RSI) – a momentum indicator that shows the strength and speed of price movements. An RSI above 70 is generally considered overbought, while an RSI below 30 indicates oversold conditions. Historically, the RSI has proven to be a helpful leading indicator for bitcoin.

Moving averages such as the 20-week band (a combination of the 20-week SMA and the 21-week EMA) and the 50-week SMA are equally relevant for assessing the overall trend.

If the 21-week EMA rises above the 20-week SMA, it has historically been considered a reliable signal of accelerating upward momentum in bitcoin’s price. Conversely, historical data show that if the weekly closing price falls below the 50-week SMA, it is often followed by extended correction phases. Chart analysts primarily use the 50-week average to assess whether the bitcoin price is still in an overall upward trend.

_{Source: TradingView}

On-chain analysis: a look into the blockchain

On-chain analysis uses blockchain data to reveal the cost basis of various bitcoin holder groups. This enables the identification of current profit and loss zones for both short- and long-term investors, as well as an assessment of the potential risk of additional selling pressure.

An important indicator is the cost basis of short-term holders (STH cost basis). It includes all bitcoins that have been moved within less than 150 days.

Examining the standard deviations of the STH cost basis, a clear corridor has emerged since the November 2022 low: the bitcoin price has largely moved between +1σ and −1σ. This represents the one-standard-deviation range around the mean, which typically contains about two-thirds of observations. For investors, this corridor serves as a practical guideline, as long as the historical relationship holds. 

_{Source: bitview.space}

Demand analysis: who buys bitcoin?

As with any asset, bitcoin’s price is ultimately driven by supply and demand. On the demand side, the key question is which buyer groups exert the strongest influence on the market. Two buyer groups stand out in the current cycle:

• Bitcoin spot ETFs
• Bitcoin treasury companies, which strategically hold BTC on their balance sheets

An analysis of recent months indicates that bitcoin’s price tended to rise when the daily purchase volume from these institutional players exceeded the 450 newly mined bitcoins per day. In the current cycle, spot ETFs and treasury companies have therefore emerged as key price drivers. 

_{Source: TradingView}

Important legal information

_{This publication is intended for information and marketing purposes only, and does not constitute investment advice or a specific individual investment recommendation. It is not a sales prospectus and does not constitute a request, an offer, or a recommendation to buy or sell investment instruments or investment services, or to engage in any other transaction. Maerki Baumann & Co. AG does not provide legal or tax advice. Investors are therefore advised to obtain independent legal or tax advice concerning the suitability of such investments, since their tax treatment depends on the personal circumstances of the investor in question and is subject to change at any time. ­Maerki Baumann & Co. AG holds a Swiss banking licence issued by the Financial Market Supervisory Authority (FINMA). This publication is expressly not intended for persons domiciled in Germany or so-called U.S. persons.}
 

Editorial deadline: 9 October 2025

Maerki Baumann & Co. AG
Dreikönigstrasse 6, CH-8002 Zurich
T +41 44 286 25 25, info@maerki-baumann.ch
www.maerki-baumann.ch