In a recent article for Barron’s, contributor Mark Hulbert shares insights related to a recent cryptocurrency valuation analysis that concluded Bitcoin is priced “more than 50% higher than its fair value of about $12,000.”

The analysis was conducted by Claude Erb, a former commodities portfolio manager at TCW Group. Hulbert cites Erb’s 2013 analysis of precious metals valuations that concluded gold’s fair value was less than half its then-current price—and how, for the 2 ½ years that followed, gold fell by $600 an ounce. “That alone inclines me to pay close attention to what he is now saying about Bitcoin,” Hulbert writes, adding that the cryptocurrency has “been on a tear of late, with a year-to-date gain of 170%” (the article was published in mid-December).

According to Hulbert, Bitcoin’s valuation of $12,000 is “based on the thesis that its value derives from what’s known as a ‘network effect.’ That is, a network’s value grows faster than the number of connected users.” Hulbert points out that while this is not the only method for valuing bitcoin, Erb “suggests we give it serious consideration because no other relative valuation approach is empirically more plausible—and the predictions of the social-network framework are impressively correlated with the trajectory of Bitcoin’s price history.”

Hulbert concludes, “It’s entirely possible that there is another model that does an even better job” of outlining Bitcoin’s price trajectory, but argues that in the meantime, “Erb’s social-network framework introduces a quantitative discipline into an arena that heretofore has been characterized largely by marketing slogans.”