Luca Minici @TheEtoroProject: "💡𝐓𝐇𝐄 𝐋𝐈𝐄𝐒 𝐀𝐁𝐎𝐔𝐓 𝐂𝐑𝐘𝐏𝐓𝐎𝐒: 𝐇𝐎𝐖..."

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💡𝐓𝐇𝐄 𝐋𝐈𝐄𝐒 𝐀𝐁𝐎𝐔𝐓 𝐂𝐑𝐘𝐏𝐓𝐎𝐒: 𝐇𝐎𝐖 𝐀𝐒𝐒𝐄𝐓𝐒 𝐀𝐑𝐄 𝐕𝐀𝐋𝐔𝐄𝐃 💡 When a cryptocurrency bull run begins, it’s always the same story: everyone suddenly claims to be an expert at predicting prices. Etoro becomes saturated with speculative opinions, many of which are misleading or outright dangerous, confusing inexperienced investors. 🌀 In this article, I’ll explain the concept of intrinsic value in business and the most common method to determine it. For stocks, intrinsic value represents the price market value should aim for, excluding short-term speculative fluctuations caused by supply and demand. 📊 📈 𝐈𝐧𝐭𝐫𝐢𝐧𝐬𝐢𝐜 𝐕𝐚𝐥𝐮𝐞 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭𝐞𝐝 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 (𝐃𝐂𝐅) 𝐌𝐞𝐭𝐡𝐨𝐝 The Discounted Cash Flow (DCF) method is one of the most reliable ways to value businesses. It focuses on a company’s ability to generate positive cash flows in the future. In simpler terms, a business has intrinsic value today because it can create wealth tomorrow. 💰 𝐊𝐞𝐲 𝐂𝐨𝐦𝐩𝐨𝐧𝐞𝐧𝐭𝐬 𝐨𝐟 𝐭𝐡𝐞 𝐃𝐂𝐅 The DCF model estimates the present value of future cash flows, adjusted for the time value of money. Here are the main variables: 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧: The value of assets and liabilities. 🏦 𝐅𝐮𝐭𝐮𝐫𝐞 𝐜𝐚𝐬𝐡 𝐟𝐥𝐨𝐰𝐬: Forecasts based on budgets, industrial plans, and earnings reports. 📑 𝐂𝐨𝐬𝐭 𝐨𝐟 𝐜𝐚𝐩𝐢𝐭𝐚𝐥: Financial structure: Debt costs (interest rates) and capital composition. 💵 Country-specific and sector-specific risks: External factors affecting capital costs. 🌍 Macroeconomic conditions: Inflation expectations, tax rates, and other broader economic variables. 📉 These elements form a systematic and scientific approach, even though the model is still based on estimates. 𝐇𝐨𝐰 𝐂𝐡𝐚𝐧𝐠𝐞𝐬 𝐈𝐦𝐩𝐚𝐜𝐭 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧 The DCF model’s outcome is sensitive to changes in its inputs: If future cash flows increase due to higher sales or cost reductions, the company’s value rises. 📈 If the cost of capital increases due to rising interest rates or higher sector or country risk, the value decreases. 📉 Higher inflation or tax rates erode future cash flows, reducing the company’s value. These examples show how the DCF anchors valuations to real economic factors and we can see it ie. every time we wait for news from FED $SPY (State Street SPDR S&P 500 ETF) $QQQ (Invesco QQQ) 💸 𝐂𝐫𝐲𝐩𝐭𝐨𝐜𝐮𝐫𝐫𝐞𝐧𝐜𝐢𝐞𝐬: 𝐀 𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐭 𝐒𝐭𝐨𝐫𝐲 Cryptocurrencies, unlike businesses, are not operational entities: they do not generate cash flows, hold assets, or maintain any relationship with the real economy. This makes it impossible to value them using the DCF model or any other fundamentals-based method. Instead, cryptocurrency prices are almost entirely driven by speculation and the actions of large capital holders. Simply put, their value is arbitrary. Anyone claiming to predict cryptocurrency prices with certainty, even in good faith, is misleading. 🛑 $BTC $ADA $XRP $ETH $TRX $SOL $DOGE 🤖 𝐓𝐡𝐞 𝐈𝐥𝐥𝐮𝐬𝐢𝐨𝐧 𝐨𝐟 𝐓𝐞𝐜𝐡𝐧𝐢𝐜𝐚𝐥 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬 In markets lacking fundamentals, many traders rely on technical analysis to predict price movements. This method interprets charts 📊 and uses statistical indicators 📈 to forecast potential price directions. 𝐖𝐡𝐲 𝐓𝐞𝐜𝐡𝐧𝐢𝐜𝐚𝐥 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬 𝐅𝐚𝐥𝐥𝐬 𝐒𝐡𝐨𝐫𝐭 𝐒𝐮𝐛𝐣𝐞𝐜𝐭𝐢𝐯𝐢𝐭𝐲: Chart patterns, trends, and resistance/support levels depend heavily on individual interpretation, making them more of an art 🎨 than a science. 𝐈𝐧𝐜𝐨𝐧𝐬𝐢𝐬𝐭𝐞𝐧𝐭 𝐑𝐞𝐬𝐮𝐥𝐭𝐬: Tools like RSI, MACD, and moving averages lack consistent statistical correlations. 🌀 While technical analysis may "work" under specific conditions, it cannot provide consistent, predictive results over the long term. True scientific methods require results to be repeatable across a broad range of scenarios. 🧠 𝐒𝐦𝐚𝐫𝐭 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞𝐬 Navigating the speculative and manipulative cryptocurrency market requires discipline. Here are two strategies to consider: 1. Buy and Hold This approach involves purchasing cryptocurrencies and holding onto them indefinitely, aligning with personal financial goals. 🛡️Big investors that dominate the cryptocurrency market manipulate prices, exploiting volatility and unregulated conditions. Holding through market turbulence avoids artificial losses caused by such tactics. 2. The Casino Method Inspired by casinos 🎲, this strategy involves systematically setting take profits at levels two or three times larger than stop losses: by following a strict, robotic discipline 🤖 and ignoring emotions, traders can statistically improve their chances of long-term success, minimizing the effects of market manipulation. Understanding the difference between structured, scientific valuation methods and speculative, boldness-driven markets is crucial for making informed investment decisions