How to value bitcoin and other cryptocurrencies—in theory — Quartz

Buy, sell, or hold? Those are the eternal questions confronting traders, and they are particularly urgent in volatile crypto markets.

There are a number of ways that analysts are trying to apply something resembling financial analysis to these newfangled digital assets, in hopes of arriving at recommendations for when to load up and when to stay away. Here are some of the signals they use to measure what cryptocurrencies are worth—in theory, anyway.

A “P/E ratio” for crypto coins

A popular way to value a company’s stock is to look at the ratio of its share price to the firm’s per-share earnings—essentially, how much investors are willing to pay for each dollar of earnings. A high P/E ratio means that the market expects a lot of future growth (or might be getting ahead of itself), while a low number may suggest an undervalued opportunity (or a no-hoper).

In crypto, the network-value to transactions ratio (NVT) is considered the analog. If a cryptocurrency is a…