Disclaimer: This article is not meant as investment advice. Use it to supplement your own thoughts and analysis.

If you haven’t read the prequel to this article, or find yourself needing more background information, check out this previous post. The intro to this article is a brief recap of what was covered there.

Abstract

Our work to bring fundamental ways to value crypto has led us to believe that ratio analysis could hold the keys to understanding a piece of the puzzle. Using new and improved ratio analysis methods based on network value, we find that Ethereum and Dogecoin (yes, really) have the most attractive valuations and that historically, Ethereum, Ethereum Classic, Bitcoin Cash, and Bitcoin Gold are under-priced.

Introduction

I’ve talked previously on the power of a digital asset’s network. After all, if we fundamentally view these as an addition to the internet to improve our ability as humans to interact, what better way would there be to value them by their ability so far to do that?

To tackle this, the Coinmetrics team proposed a ratio called Network Value to Transactions (NVT) to measure how useful a token has been. Dmitry Kalichkin revised this to make it more of a trading signal. And in this article, I improved on Kalichkin’s NVT to make it more receptive to the short-term nature of the crypto market.