CryptoQuant CEO Ki Young Ju Debunks Bitcoin Overvaluation Myth Using Thermo Cap Model


In an intriguing development, Ki Young Ju, CEO and founder of CryptoQuant, an esteemed on-chain analytics company, demystified the much-debated concept of Bitcoin’s alleged overvaluation. Ju argued that the esteemed cryptocurrency’s valuation is not necessarily inflated in relation to its foundational network principles.

For context, Ki Young Ju dove into the nuances of the Bitcoin Thermo Cap Ratio, a unique valuation model that considers the total asset value based on each token’s inherent value at its mining point on the network. This method proposes a reciprocal understanding of valuation as opposed to conventional market capitalization, which attributes the asset’s total value to the current spot price of all circulating coins.

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The Thermo Cap model, unlike its market cap counterpart, provides a rather peripheral viewpoint by calculating the sum total value of all Bitcoins mined since the advent of the blockchain—making it a potential measure of the “true” capital inflows the network has witnessed.

As Ki Young Ju recounts, recent trends depict a steady upswing in the Bitcoin Thermo Cap. Above all, this pattern reflects an amplified influx of capital into the digital asset over time.

However, it’s not only the Thermo Cap that interests Ju. The focus of our narrative would be the Thermo Cap Ratio, a potent metric that works by calculating the ratio between Bitcoin’s market cap and its Thermo Cap.

Ju structured his argument around the intriguing data pattern that emerged from the Thermo Cap Ratio recently. The chart vividly displays the instances where spikes in the Thermo Cap Ratio coincided with Bitcoin price peaks.

More explicitly, at high Thermo Cap Ratio points, the Bitcoin market cap size looms significantly larger than the Thermo Cap. This implies that the cryptocurrency is trading at a rate that far outpaces the value allotted to it at its mining point. Analyzing past trends, Ju also points out that these are precisely the levels where bull run tops have happened in the past.

Further, a sharp insight into the chart indicates that Bitcoin’s bottomed-out periods coincide with dips in the Thermo Cap Ratio. Interestingly, even though the ratio has been on the rise, it hasn’t reached those historic peak levels yet.

With a keen eye, Ki Young Ju decisively notes, “Bitcoin is not currently overvalued based on network fundamentals.”

In the current market situation, Bitcoin seems to be locked in a range, unable to break through. Its price has remained fairly steady, hovering around the $68,900 mark at the time of writing. Thus, as per Ju’s calculations, Bitcoin might still have room to grow before it can be considered overvalued.