Bitcoin (BTC) faced significant price weaknesses over the weekend after the release of August nonfarm payrolls (NFP) data, which failed to meet analysts’ expectations. Following the NFP data release, BTC experienced a sharp decline of almost 5%, dropping below the $54,000 range, reaching its lowest level since early August. This price weakness also had a ripple effect on the broader crypto market, with meme coins and AI sectors seeing a 6% and 7% drop, respectively.
Amidst the price volatility, analysts at Presto Research highlighted the apparent undervaluation of Bitcoin in the market. Peter Chung and Min Jung, the analysts, stated that the current market price of the pioneering cryptocurrency is “grossly undervalued” due to overlooking one key underlying value, which is network security. Despite Bitcoin’s hashrate reaching an all-time high of 679 EH/s, indicating increased network security, the market seems to be undervaluing this crucial aspect of the asset.
In their report on September 9, the analysts pointed out the discrepancies between the price of Bitcoin and its underlying value. They emphasized that while the price of BTC is subject to volatility and short-term fluctuations, the value itself is relatively stable and changes slowly. The market’s ignorance of the security provided by Bitcoin’s hashrate is evident in the historic low hash price of $39.01/PH/s/day. Despite being the most secure network globally, the market is not recognizing this fundamental aspect of Bitcoin’s value.
The analysts also stressed the importance of focusing on Bitcoin’s long-term value, which is supported by the network’s security features and the increasing acceptance of the asset as “digital gold.” They mentioned that the world has been gradually embracing the concept of ‘digital gold’ over the last 15 years, and with the availability of spot ETFs, Bitcoin is currently undervalued. Investors are advised to consider the long-term potential of Bitcoin rather than being swayed by short-term price weaknesses.
As of now, Bitcoin is trading above $55,000, showing a minor surge of less than 2% on the day. However, further price volatility is expected following the release of Consumer Price Index (CPI) data on Wednesday and Producer Price Index (PPI) data on Thursday. It is crucial for investors to take into account the fundamental aspects of Bitcoin’s value, such as network security, rather than being solely focused on short-term price movements. By recognizing the underlying value of Bitcoin, investors can make more informed decisions about the cryptocurrency’s potential growth and future market performance.