Bitcoin (BTC) faced a significant price drop over the weekend due to the release of August nonfarm payrolls (NFP) data, which failed to meet analysts’ expectations. This led BTC to plummet by nearly 5%, dipping below the $54,000 mark and hitting its lowest level since early August. The resultant market volatility led to the liquidation of $200 million in long positions, affecting not only Bitcoin but also the entire cryptocurrency market. Meme coins and AI sectors also experienced declines of 6% and 7%, respectively.
Amidst this price weakness influenced by macroeconomic factors, analysts at Presto Research highlighted the glaring undervaluation of bitcoin in the market. Peter Chung and Min Jung pointed out in a report on September 9 that the current price of BTC does not accurately reflect its underlying value, focusing specifically on its network security. The disparity between the price of BTC and its fundamental value is stark, with the former being volatile and short-term, while the latter is relatively stable and changes gradually. Despite Bitcoin’s hashrate reaching an all-time high of 679 EH/s, indicating enhanced network security, the market appears to underappreciate this critical aspect of the asset, as evidenced by the historically low hash price.
Long-Term Value of Bitcoin
The analysts emphasized the importance of recognizing Bitcoin’s long-term value, which is supported by the network’s security and the increasing acceptance of the digital asset as “digital gold.” While short-term price fluctuations are inevitable, investors are urged to pay more attention to BTC’s enduring value proposition, especially considering the ongoing trend of embracing digital gold. With the availability of spot ETFs improving the market’s infrastructure, the analysts believe that Bitcoin is currently undervalued.
Despite the recent price surge that pushed Bitcoin above $55,000, the digital asset is expected to undergo further volatility in response to the upcoming release of Consumer Price Index (CPI) data on Wednesday and Producer Price Index (PPI) data on Thursday. These economic indicators can impact Bitcoin’s price trajectory as investors respond to changing market dynamics.
The recent price weakness highlights the market’s failure to fully appreciate the underlying value of Bitcoin, particularly its network security. As the cryptocurrency landscape continues to evolve and gain mainstream acceptance, investors should focus on the long-term value proposition of Bitcoin rather than getting caught up in short-term fluctuations. By recognizing Bitcoin’s potential as digital gold and its robust network security, investors can make more informed decisions about the true value of this pioneering cryptocurrency.