Jump to content

Recommended Posts

I have read some things about people trying to assign a P/E (Price over Earnings) ratio to Bitcoin BTC.  One writer estimated a ratio of 35, and other 50.

I wonder, is there any metric that we can use to try to assign a P/E ratio to Ripple XRP?

This would be a useful valuation tool for all cryptos if we can figure it out.

Link to post
Share on other sites
  • Replies 25
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Popular Posts

@Kylo Ren Hey - have a look into my writeup, on p. 8 ...might be helpful for you in terms of ratio based valuation. I used a NV/T ratio.   

It's difficult for me to think of it in terms of a P/E ratio because there are no earnings.  I look at it more like an asset/currency.  Bitcoin to me seems like gold - like gold, it doesn't have a who

I've been looking at market cap divided by transaction volume. It's a simple metric, but this gives you the sense of how inflated prices are. The closer to zero, the more the price is reflected in the

It's difficult for me to think of it in terms of a P/E ratio because there are no earnings.  I look at it more like an asset/currency.  Bitcoin to me seems like gold - like gold, it doesn't have a whole lot of utility, but functions well as a store of value.  XRP seems like oil - it has utility - it greases the payment rails, it eliminates the need for nostro accounts, prevents ddos, etc., and it is a store of value.  

Link to post
Share on other sites
33 minutes ago, Kylo Ren said:

I have read some things about people trying to assign a P/E (Price over Earnings) ratio to Bitcoin BTC.  One writer estimated a ratio of 35, and other 50.

How did the writers arrive at those figures? Can the same method be applied to XRP?

Link to post
Share on other sites

I've been looking at market cap divided by transaction volume. It's a simple metric, but this gives you the sense of how inflated prices are. The closer to zero, the more the price is reflected in the actual value of the currency. The last time bitcoin crashed in 2013-14, this number was well over 100, signaling to sell. Today that number is 31.5, meaning that the price still isn't out of hand and has room to grow. XRP would be at 102 by using the same metric. While I would probably sell if this were Bitcoin, I've learned not to compare currencies because they all operate very differently. However, it does raise flags as to the possibility of XRP being overvalued. Comparatively, Stellar is at 41.6. Just saying, Ripple exists to make banks and itself rich. Stellar exists to empower ordinary people, much like Amazon did during the dot-com bubble. I'd be cautious of Ripple, but take this new metric with a grain of salt. 

Edited by tylerdurdenn
Link to post
Share on other sites
4 hours ago, Xi195 said:

Currencies don't produce earnings therefore you'll always be searching for 1/2 of the equation. It's like asking what the P/E ratio of the USD is.

Ripple (the company) must have an earnings figure, but as they are private funded, we only ca guess about both valuation and earnings.... They are not obligated to publish any of their results

Link to post
Share on other sites
14 hours ago, Alluvial said:

It's difficult for me to think of it in terms of a P/E ratio because there are no earnings.  I look at it more like an asset/currency.  Bitcoin to me seems like gold - like gold, it doesn't have a whole lot of utility, but functions well as a store of value.  XRP seems like oil - it has utility - it greases the payment rails, it eliminates the need for nostro accounts, prevents ddos, etc., and it is a store of value.  

gold doesn't have utility??? why do you think smart phones are so expensive ,,, open one up and see whats inside ,,, ill give you a hint GOLD.  

http://money.cnn.com/2016/04/15/technology/apple-gold-recycling/index.html

Link to post
Share on other sites
19 hours ago, kanaas said:

Ripple (the company) must have an earnings

If Ripple had profits they could be used to calculate the P/E of shares in Ripple. Since  XRP are not shares in Ripple, they Cant be used to calculate the P/E of XRP. There is no such thing as earnings for a currency...as far as I know. 

Edited by Xi195
Link to post
Share on other sites
2 hours ago, Xi195 said:

If Ripple had profits they could be used to calculate the P/E of shares in Ripple. Since  XRP are not shares in Ripple, they don't help calculating the P/E of XRP. There is no such thing as earnings for a currency...as far as I know. 

@Xi195 is totally right guys & gals : it's nonsense to talk about a P/E on either a currency or a crypto. We could just as well want to value my grandmother on a P/E-basis, since she's got no earnings either. ?

Link to post
Share on other sites
15 hours ago, tylerdurdenn said:

I've been looking at market cap divided by transaction volume. It's a simple metric, but this gives you the sense of how inflated prices are. The closer to zero, the more the price is reflected in the actual value of the currency. The last time bitcoin crashed in 2013-14, this number was well over 100, signaling to sell. Today that number is 31.5, meaning that the price still isn't out of hand and has room to grow. XRP would be at 102 by using the same metric. While I would probably sell if this were Bitcoin, I've learned not to compare currencies because they all operate very differently. However, it does raise flags as to the possibility of XRP being overvalued. Comparatively, Stellar is at 41.6. Just saying, Ripple exists to make banks and itself rich. Stellar exists to empower ordinary people, much like Amazon did during the dot-com bubble. I'd be cautious of Ripple, but take this new metric with a grain of salt. 

Pretty good observation, I noticed the same. Either the Ripple market cap seems artificially high, or the transaction volume is abnormally low for its size. If we are comparing apples (Bitcoin) to bananas (Ripple), which is probably a bad thing to do. I don't think Ripple exists solely to make banks and themselves rich though. Its clear they want to change payments, which helps everyone not just banks. Stellar wants to empower ordinary people, but to do that you have to upgrade the legacy systems first.

Link to post
Share on other sites

Some good stuff here guys, thanks.  I don't think it's pointless at all to try to find more advanced metrics.  

I'm looking for a formula or metric that would allow me to compare any two crypto coins and see which ones look promising for future investment.

Link to post
Share on other sites
7 minutes ago, Kylo Ren said:

Some good stuff here guys, thanks.  I don't think it's pointless at all to try to find more advanced metrics.  

I'm looking for a formula or metric that would allow me to compare any two crypto coins and see which ones look promising for future investment.

How about the number of  institutional holders? Certainly that's what's going to give value to XRP.  Retail investors are fickle, and a lot of them know little about what they are doing. So value there can be fleeting. But the more institutional holders, the more value seems to be there. That's why the US dollar is valuable, right? Banks, institutions, corporations like to hold it in reserve to  use it. 

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now


×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.