Bitcoin's discount to hash rate highest since early 2020 — Mike McGlone
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."
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:
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
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