The quantity theory of crypto: what is Bitcoin worth as a medium of exchange?
bankunderground.co.uk
The Quantity Theory of Money — built for gold and dollars — gets stress-tested on Bitcoin, and the results explain why crypto prices swing so wildly on pure sentiment alone.
Quantity Theory of MoneyMonetary TheorySpeculative BubblesEfficient Market Hypothesis
Theory Briefing
- Bitcoin's extreme price volatility maps neatly onto the Quantity Theory of Money when sentiment is treated as a stand-in for monetary velocity.
- Because Bitcoin has no intrinsic yield, its 'velocity' term is almost entirely driven by speculative belief — making crashes self-fulfilling.
- The framework reveals Bitcoin's value as a medium of exchange is structurally fragile, collapsing whenever confidence does.