Current price of BTC creates some serious problems for mining market
The market value of bitcoin has dropped significantly since reaching its all-time high in November, and some indicators confirm that digital gold is undervalued despite the recent correction we have seen. has gone.
Yardstick indicator
The chain-based indicator works in a simple way to allow investors to properly evaluate Bitcoin without using any complicated analysis tools. The formula of the indicator simply divides the market capitalization of the cryptocurrency by the hashrate, normalized over two years of data.
The metric works in a similar way to the PE ratio, but instead of stock earnings, takes into account the ratio of the energy work done to secure the bitcoin network in relation to the yardstick price.
As of today, the indicator shows the second lowest reading in the asset’s history, which means that the current value of the cryptocurrency makes it extraordinarily cheap considering the energy volume used to back up its network.
Technically, the imbalance between the stability of the network and the price required to cover BTC’s market cap determines its relative value. With the network’s hash rate hitting new highs, increasing energy consumption and bitcoin trading at multi-month lows, we can safely say that a low valuation is a true valuation.
Miners are feeling lack of balance
As we already mentioned, the amount of power needed to maintain the Bitcoin network right now is nowhere near the value at which the cryptocurrency is trading. According to the profits of individual miners and companies, the lack of fair valuation creates serious issues.
At press time, digital gold is trading at $20,440 and has lost about 0.2% of its value over the past 24 hours.
