Bitcoin’s discount to hash rate highest since early 2020 — Mike McGlone

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Bloomberg Intel­li­gence senior com­mod­i­ty strate­gist Mike McGlone says Bit­coin’s (BTC’s) rel­a­tive dis­count to its high hash rate in Octo­ber — the largest since the first quar­ter of 2020 — could soon see Bit­coin return to “its propen­si­ty to out­per­form most assets.”

In an Oct. 19 Twit­ter post, the Bloomberg ana­lyst sug­gest­ed that Bit­coin’s ever increas­ing hash rate — a mea­sure of the pro­cess­ing pow­er and secu­ri­ty of a blockchain — rel­a­tive to its price points “to risk/reward lean­ing favorably.”

Many believe that in the­o­ry Bit­coin’s hash rate should go up rel­a­tive to its price. 

McGlone point­ed to a graph not­ing that the 10-day aver­age of Bitcoin’s hash rate in Octo­ber is “rough­ly equiv­a­lent” to the lev­el it should be at around $70,000. How­ev­er, the price is instead cur­rent­ly at $19,500 as of Oct. 18.

McGlone not­ed that such a large gulf between the price and the hash rate was last seen dur­ing the “1Q 2020 swoon” — a dip that pre­ced­ed a mete­oric climb that last­ed through 2020 and 2021. 

McGlone tipped that it was pos­si­ble we are now see­ing a “sim­i­lar price foun­da­tion form­ing now.”

Graph of Bit­coin hash rate and price. Source: Bloomberg Intelligence

The Bloomberg ana­lyst, known to be a per­ma bull, said that the high rash rates, along with ris­ing demand, adop­tion and reg­u­la­tion means Bit­coin could be enter­ing an “inex­orable phase of its migra­tion into the main­stream and at a rel­a­tive­ly dis­count­ed price.”

In a sep­a­rate post on Linkedin, McGlone said it “may be a mat­ter of time” before Bit­coin returns to its propen­si­ty to out­per­form most major assets, commenting: 

“Return­ing to its propen­si­ty to out­per­form most assets may be a mat­ter of time, as main­stream adop­tion pro­gress­es and adap­tive changes in US account­ing stan­dards give it a lift.”

McGlone also said Bitcoin’s price “should con­tin­ue to rise over time” giv­en the laws of sup­ply and demand, adding that the cryp­tocur­ren­cy is show­ing signs of “bot­tom­ing” in 4Q 2022. 

Relat­ed: Bit­coin like­ly to tran­si­tion to a risk-off asset in H2 2022, says Bloomberg analyst

“It’s lit­tle sur­prise that a rel­a­tive­ly new asset that had sky­rock­et­ed has declined due to the rapid pace of Fed­er­al Reserve tight­en­ing in 2022, but Bit­coin is show­ing signs of bot­tom­ing and diver­gent strength in 4Q,” he explained.

Pre­vi­ous­ly the Bloomberg ana­lyst has sug­gest­ed that BTC is a “wild card” which is “ripe” to out­per­form once tra­di­tion­al stocks final­ly bot­tom out, and pre­dict­ed that BTC had the poten­tial to reach $100K in 2022 as the dig­i­tal cur­ren­cy com­pletes its tran­si­tion from a risk-on to a risk-off asset. 



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