Crypto (pt.2) - an investment?

Dobromir Risov
Sep 2
3 min read

Updated: Oct 28

From: Dobromir Risov · September 2025

Bitcoin cryptocurrency coin with chart background, investment fund, Europe, Ireland, Dublin.

Intro

David Chaum came up with a concept of a cryptocurrency in 1983. Fast forward to 2009, one (or several programmers) using the pseudonym Satoshi Nakamoto launched Bitcoin. Fast forward to 2025 prices for Bitcoin have gone up to surreal heights.. In Crypto (pt.1) - an overview I introduced you to the world of cryptocurrencies. In today's blog I write about crypto as an investment.

Main

Today I talk first about the price movements in the past. Then I offer two ways to assess the value of Bitcoin. I show below the impressive price moves of Bitcoin using an index called Coin Desk Bitcoin Price Index (XBX). When you look at the graph below - around 2016 the index traded close to 0$. Late in October 2024, (when I was writing on this blog for the first time) the index had soared to 70.000$. Barely imaginable profits within a period of 8 years!

Financial graph showing data trends from Jan 16 to Jan 24 with All and Compare

I group the graph in three stages: The first stage starts at around 2015 ( Price: $ 0). It lasts about until 2017. The price remains more or less unchanged (at least on these scales). Profits are modest.

The second stage is from late 2017 until mid 2020. During this period the price has gone up to around 10.000$. The price stabilised with some ups and downs at this level. If you had bought at 1.000$ in 2017 and had held Bitcoin until 2020 you would have sold it for 10.000$. Within roughly 3 years the price of your purchase has gone to 10 times the purchase price.

The third stage is from mid 2020 until late 2024, where this graph ends. The index skyrockets from around 10.000$ up to 70.000$. This was not a straightforward move though. Wild swings with ups and downs requiring strong nerves. In late August 2025 when I publish this blog, the index is trading at more than 110.000$. The index went up by another 50% within less than a year. Coming back to the title of this blog, is Bitcoin an investment? Mr Bindseil & Mr Schaaf who both work for the European Central Bank state in their blog on Bitcoin:

that (…) the fair value of Bitcoin is still zero.

They say that this index´s fair value is 0$. When calculating a fair value, investors have a figure separate from the price. By comparing both figures buyers can decide if the index is priced favourably. The calculation uses an intrinsic approach - whether the investment generates revenue internally. Examples: with a flat it would be rental income. With a stock it would be dividends. In the case of Bitcoin and other cryptocurrencies, there is no income. Buyers of Bitcoin rely exclusively on price increases for profit.

When I did research for this topic I found another definition at the website Investopedia:

Fair value is when a buyer and seller freely agree.

This approach to fair value does not differentiate between price and value of an asset. Hence price and value are the same. From this perspective, Bitcoin is worth, what it is currently being traded for. That changes every day.

There´s also another way to decide if Bitcoin is an investment. Would you consider buying foreign currencies such as the US dollar an investment? If not would buying a cryptocurrency be considered an investment?

Summary

I wrote about the stellar price movements of Bitcoin in the past. I used an index to demonstrate that. I presented next the concept of fair value. I did so by using two different definitions. I presented you those so you form your own opinion. People usually go with one of the two definitions. I suggest to apply either of both consistently. It allows for easier financial management. It becomes complicated when you start to mix both. I recommend to read my blog on the Tulip Mania regardless which fair value approach you prefer.