Bitcoin undervalued by $200 according to new report from Needham & Company

Francesca Washtell
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Bitcoin is currently valued at around $412 (Source: Getty)

The leading cryptocurrency bitcoin has been undervalued by around $200, according to a new report by investment bank and asset managing firm Needham & Company.

The digital currency should have a price of $655, rather than the current level of around $412 that the currency is trading at, Needham & Company argued.

The firm argued bitcoin "has a value as both a digital gold and as a payments channel" and that, having compared it to the amount of money being invested in gold, it should be trading at almost 60 per cent higher.

"We believe that the price of bitcoin stands to benefit substantially from rising demand for its two main use cases as a 'digital gold' and as an alternative payments channel," Spencer Bogart, a bitcoin-focused equity research associate at Needham and author of the report.

"We believe that this rising demand is the result of the relative advantages of using bitcoin and is being driven by market trends and secular changes such as globalization, continued growth in e-commerce and by the ubiquity of enabling technology such as mobile phones. As a direct result, bitcoin is disrupting trillion-dollar markets in payments and value exchange."

Bogart calculated the suggested $655 price of bitcoin by comparing the $74bn worth of gold that is currently held in exchange-traded funds globally and the 75 per cent of the bitcoin market, valued at over $6bn, which is treated like an investment.

The recommendation to trade bitcoin at a higher level comes less than three months after one of the longest-standing supporters of the cryptocurrency, Mike Hearn, said bitcoin's failure was a "now inescapable conclusion".

"The fundamentals are broken and whatever happens to the price in the short term, the long term trend should probably be downwards. I will no longer be taking part in Bitcoin development and have sold all my coins," Hearn said.

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