Mark Yusko of Morgan Creek Capital said on Friday that SpaceX is trading at a 'silly' and unsustainable valuation, while Bitcoin remains undervalued relative to fair value. Yusko cited SpaceX's roughly $2 trillion valuation with approximately 4% of shares floated as mathematically incapable of justifying a 10x return, comparing the IPO structure to Dogecoin. He stated capital is likely to shift from overvalued artificial intelligence equities to Bitcoin and gold, possibly triggered by a correction in AI-related stocks as early as the third or fourth quarter.
Yusko Compares SpaceX IPO Structure to Dogecoin
Yusko criticized Elon Musk's SpaceX IPO approach in a Cointelegraph interview, likening it to Dogecoin and Musk's previous approach with Tesla. SpaceX made it into the index with about 4% of shares floated, not making any money, and Yusko said the deal was a way for Musk and early investors to get exit liquidity from retail investors. To justify a 10x return, SpaceX would have to achieve about half of projected U.S. GDP in 10 years, given its roughly $2 trillion valuation, a scenario he called mathematically implausible.
"To me, SpaceX is the equivalent of Dogecoin. Mark Cuban and Elon Musk own most of the coins, and then there's this cult of people that own it and think it's worth something, but it's not worth anything," said Yusko, managing director of Morgan Creek Capital.
Yusko singled out Anthropic, OpenAI and SpaceX, saying that their valuations relative to their power to generate earnings were "beyond silly." Comparing the crypto market to SpaceX, Yusko said he does not expect a crypto-market unwinding on the scale of past equity corrections. Leverage in crypto markets has already been flushed out between last October and February, he argued.
Bitcoin Fair Value Estimated at $105,000-$108,000 Using Metcalfe's Law
Yusko said he has been buying Bitcoin every week since February and would like to continue until October, using the model of analyst Tim Peterson based on Metcalfe's law, which he said currently values Bitcoin between $105,000 and $108,000. Bitcoin's price was trading at $64,149, down 0.4% in the last 24 hours. On Stocktwits, retail sentiment around BTC dipped to the 'neutral' zone from the 'Bullish' zone over the past day.
"So we've been buying a little bit every week since February, and we'll continue to do that... probably through October or so," said Yusko.
In crypto, analysts have applied Metcalfe's Law to Bitcoin by defining active addresses or wallets as "users" on the network. The theory is that the value of Bitcoin should be proportional to the square of the number of users, which provides a theoretical "fair value" against which to compare its actual market price, to see if it is over- or under-valued.
Bitcoin Four-Year Cycle Linked to Halving Schedule
Yusko says Bitcoin's four-year cycle is because of its in-built halving schedule, which incentivizes miners to 'HODL' (Hold On for Dear Life) rather than sell, leading to price appreciation, which eventually invites speculative excess and subsequent corrections. "In the previous cycles, we went down 84%, 83% and 74%. This time we went down around 50%...51%", he said. He took this as a sign that the market is maturing.
Yusko is Founder, CEO and Chief Investment Officer of Morgan Creek Digital, a hedge fund focused on investments in the blockchain and cryptocurrency ecosystem that manages $3.2 billion of assets under advisement.
FAQ
Why does Mark Yusko compare SpaceX to Dogecoin?
Yusko compared SpaceX's IPO structure to Dogecoin because SpaceX floated approximately 4% of shares at a roughly $2 trillion valuation, which he said is mathematically incapable of justifying a 10x return without achieving about half of projected U.S. GDP in 10 years. He stated the deal provides exit liquidity for Musk and early investors from retail investors.
What is Bitcoin's fair value according to Mark Yusko?
Yusko said Bitcoin's fair value is between $105,000 and $108,000, based on the model of analyst Tim Peterson using Metcalfe's law. Bitcoin was trading at $64,149 at the time of the interview, down 0.4% in the last 24 hours.
How does Metcalfe's Law apply to Bitcoin valuation?
Analysts have applied Metcalfe's Law to Bitcoin by defining active addresses or wallets as "users" on the network. The theory is that the value of Bitcoin should be proportional to the square of the number of users, which provides a theoretical "fair value" against which to compare its actual market price.
