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 October 19 Twitter mailsuggested the Bloomberg analyst that Bitcoin’s ever-increasing hash rate — a measure of the processing power and security of a blockchain — relative to the price points of “risk/reward leaning favorably.”

Many believe that, in theory, Bitcoin’s hash rate should go up in relation to its price.

McGlone pointed to a graph that noted that the 10-day average of Bitcoin’s hash rate in October corresponds “roughly” to the level it should be at around $70,000. However, the price is instead currently at $19,500 as of October 18.

McGlone noted that such a large gap between price and hashrate was last seen during the “1Q 2020 swoon” — a drop that preceded a meteoric rise that lasted through 2020 and 2021.

McGlone hinted 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 increasing demand, adoption and regulation mean that Bitcoin could enter an “inexorable phase of its migration into the mainstream and at a relatively discounted price. “

In a separate post on Linkedin, McGlone said it “could be a matter of time” before Bitcoin returns to its propensity to outperform most major assets, commenting:

“Reverting to its propensity to outperform most assets may be a matter of time, as mainstream adoption develops and adaptive changes in US accounting standards give it a boost.”

McGlone too so 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 out” in 4Q 2022.

Related: Bitcoin likely to transition to a risk-off asset in H2 2022, Bloomberg analyst says

“It’s little surprise that a relatively new asset that had skyrocketed has fallen due to the rapid tightening by the Federal Reserve in 2022, but Bitcoin is showing signs of bottoming and diverging strength in 4Q,” he explained.

The Bloomberg analyst previously suggested that BTC is a “wild card” that is “ripe” to outperform when traditional stocks finally bottom out, predicting that BTC had the potential to reach $100K in 2022 as the digital currency completes its transition from a risk on a risk-off asset.