The Valuation of Crypto –Interview with Désirée Müller

At the CV Summit a few weeks go, Désirée Müller, CEO and Partner at SwissRex AG, shared her experience and insights around the valuation of crypto at CV Labs. We followed up with her for the May edition of the CV Post to get her view on recent market developments.

Over the last months, the term “Crypto Winter” dominated the media around the globe. Now, with a slowly increasing Bitcoin price, people start talking about “Crypto Spring”. Do you see signs for the arrival of spring as well? 
Swissquote offers access to ICOs, Vontobel provides custody solutions and the Swiss Exchange is working on a regulated solution for digital tokens. Facebook is researching ways to integrate blockchain and Ripple is partnering with banks to implement a more efficient settlement mechanism for very fast and cheap transactions. Yes, Crypto Spring is coming. But on-chain activity is still at very low levels. Markets are picking up and sentiment is getting positive as investors are eyeing a new crypto asset class. Should crypto become part of every asset allocation, there is a lot of upside potential.

How do you see the price of Bitcoin develop over the years? Do you see any trends or patterns?
We classify tokens into five categories: store of value, global medium of exchange, participation, membership and local medium of exchange.

Source: SwissRex AG

We see «store of value» as the most valuable category and Bitcoin is the clear leader. Would Bitcoin substitute 10% of the market share of gold, this alone would result in a price of USD 50,000 per token. A simple regression as in the chart below points to the same price in a few years.


The huge potential of Bitcoin can be seen by making the following comparisons:

  • A maximum of 21 million Bitcoins will ever be produced — not even 1 BTC for each millionaire worldwide
  • Each citizen of the world could only own 0.002625 BTC
  • If there were only Swiss citizens, each could only own 2 BTC

How does crypto valuation differ from traditional finance and share valuations? What variables do you take into consideration for the valuation of crypto? For security tokens traditional valuation models such as Discounted Cash Flow Analysis or multiples can be used. But, for payment and utility tokens a new approach is needed. We are using our proprietary approach called Transaction-volume Creating Price (TCP Model). It calculates the price of a token that is needed to create a certain transaction volume. 
The main difference between the valuation of traditional shares and tokens is the velocity of a token. Velocity describes how many times a token changes hands per year. Inflation of the token increases supply and must be considered as well. Often, inflation is programmed into the blockchain protocol and hence easy to calculate.

How do you see Blockchain and crypto disrupting the finance sector?
Fintechs were the first wave of disruption and blockchain brings efficiency to the next level. Blockchain and crypto will automate many proccesses, especially within banks and insurances. New business models and opportunitites will arise. Financial inclusion is the keyword.

  • Settlement of payments will be much faster and cheaper. Whereas it takes up to 3 business days with SWIFT, Ripple could settle transactions in minutes.
  • Share registers will be on the blockchain and voting will be pretty easy.
  • Small businesses get better access to capital and everybody can participate with small amounts in startups.
  • Smart Contracts will make many companies redundant, especially those delivering pure trustee services.

What new or adapted regulations does the new finance sector require?
A better infrastructure for crypto custodians, insurances and regulated exchanges are first steps for institutional money to enter the crypto space. This would increase liquidity and professionalism.

One year ago you launched SwissRex AG, based in Vaduz, Liechtenstein. What’s the vision and philosophy behind SwissRex Crypto Fund? 
During my time as a portfolio manager at GAM I was confronted with Bitcoin and felt it was my duty to know about developments in the financial sector. Therefore, I analysed the space and chose ten tokens I wanted to buy and hold. It was difficult to open a wallet, to access a crypto exchange, to buy the tokens and to safely store them on a ledger. Even for someone with trading experience. At the same time, I discovered the potential of this new technology and found a whole new ecosystem that was developing behind the scene. And i felt I need to make this new asset class accessible. This is, when I contacted our co-founder Reto Stiffler who is an excellent analyst of blockchains and tokens and an experienced crypto trader. We used to work together at GAM and we know our complementary strengths. The SwissRex Crypto Fund was launched in June 2018. It differentiates with active fund management and fundamental analysis.

Are there any first learnings after the first year in business? 
Things take longer and cost more than expected. An upright team with complementary skills is key. I also learned to trust my gut feeling.

My learning curve has been very steep and I got a deep understanding of processes and products. I enjoy being the decision maker and I learned how to spend my time in a more efficient way and take responsibility in various areas. In my opinion, crypto is a new and undervalued asset class. A new technology with lots of risks and uncertainties, but also with great upside potential. I enjoy being a pioneer within this space.

About Désirée Müller

Désirée Müller is CEO & Partner of SwissRex AG. Before co-founding SwissRex AG and Crypto Consulting AG, Désirée gained extensive knowledge as a fund manager for a large long/short European equity fund at Zurich-based GAM. Prior to this she was at Credit Suisse Asset Management as manager of a Swiss Equity Fund and relationship manager for wealthy individuals in the Private Banking division. Désirée holds a Master’s degree in Banking and Finance from the University of St.Gallen.

SwissRex AG launched the actively managed SwissRex Crypto Fund in June 2018 to enable access to a new asset class. Investment decisions are based on fundamental analysis.

Crypto Consulting AG advises ICOs and STOs with regards to fine-tuning of whitepaper and token economics and provides escrow accounts including know-your customer and anti-money laundering services. Crypto Consulting AG is a member of the self-regulation organisation VQF in Switzerland.