While Bitcoin’s price is still above $10,000, and seems to have found a comfortable floor at that level, the coin is struggling to make it past the $12,000, $13,000 and higher points as the market continues to ebb and flow.
However, there are suggestions that Bitcoin is relatively undervalued at its current market price. In a newsletter, Bloomberg’s crypto branch offered a key on-chain indicator that suggests Bitcoin is currently trading at a good price.
Looking at other indicators not directly linked to Bitcoin’s market, but more its technical side and adoption metrics, Bloomberg’s crypto analyst Mike McGlone believes that Bitcoin should be closer to $15,000 than $10,000
The recent all-time highs in Bitcoin’s hashrate and more importantly, the 30-day average of active Bitcoin addresses, suggests that Bitcoin has a lot higher to go in its price and as it stands is undervalued.
The Bitcoin hash rate continues to increase and recently reached new highs. Also advancing are addresses used. A top metric for adoption, the 30-day average of Bitcoin addresses is equivalent to the price closer to $15,000 when measured on an autoscale basis since 2017,” McGlone said.
Leading the shift
One of the other more external reasons to consider Bitcoin as currently undervalued is the shift towards digital payments, and the current pressure that the financial system finds itself under immense pressure.
The likes of Paul Tudor Jones and now Microsystem have indicated a need for a shift to a new paradigm, and this is reiterated by McGlone. He says that Bitcoin appears to be a leader in “paradigm shift toward digital money and stores of value” and although he admits that it can still fail, he believes this to be unlikely, concluding:
“Our graphic depicts primary on-chain metrics that would need to be reversed for Bitcoin to not keep appreciating in price — the hash rate and active addresses.”
Bitcoin is being offered an opportunity to fill a niche that is growing ever stronger under the weight of changing financial times, which has been accelerated by the Covid-19 pandemic. Concerns about monetary policies and hyperinflation have many looking to Bitcoin as a new asset class.
Additionally, the legitimisation and normalisation of the digital asset over the years is starting to peak meaning there are more barriers being broken down about holding and trading the coin. If these barriers continue to fall, and money floods in, the coin is sure to rise substantially in price.