Analysts say Bitcoin is “grossly undervalued” given this underlying value

Bitcoin (BTC) experienced significant price weakness over the weekend following the release of non-farm payrolls (NFP) data for August, which fell short of analyst expectations.

Following the release of the NFP data, BTC experienced a sharp decline of almost 5% to trade below the $54,000 range, marking its lowest level since early August. Amid this price volatility, the crypto market liquidated $200 million in long positions. This price weakness also rubbed off on the broader crypto market, with the overall sectors of the meme coin and AI sectors falling 6% and 7%, respectively.

Short-term focus

Amid this price weakness fueled by macroeconomic factors, analysts at Presto Research highlighted the market’s apparent undervaluation of bitcoin. Analysts Peter Chung and Min Jung believe the current market price of the pioneering cryptocurrency is “grossly undervalued,” citing a key underlying value: “network security.”

In a report on September 9, they noted discrepancies between the price of BTC and its underlying value. While the former, which investors are currently focusing on, is volatile and short-term, value, on the other hand, is “relatively stable” and changes slowly.

According to recent data, Bitcoin’s hashrate reached an all-time high (ATH) of 679 EH/s. While this suggests that the network is more secure than ever, analysts stated that the market appears to be undervaluing this fundamental aspect of the asset, as evidenced by the price (as measured by the hash price) of this security, which is is at a historic low. .

“Amid macro factors dominating the BTC price conversation lately, the market is overlooking one of the key fundamentals underpinning Bitcoin’s value: the security of the network. The hashrate, the computational power that secures the network, has reached an all-time high of 679 EH/s, making it the most secure network on the planet, however, the market is ignoring this, as evidenced by the all-time low hash price of $39.01 /PH/s/day,” they said in the report.

Long term value

The analyst concluded that while short-term price weakness is inevitable, investors should focus more on BTC’s long-term value, which is based on the network’s security and growing acceptance of the asset as “digital gold”.

“The world has spent the last 15 years slowly but surely adopting the concept of ‘digital gold’; if you think this trend will continue (in fact, the availability of spot ETFs means we’re in a much better set-up than ever), BTC looks very undervalued at the moment,” they said.

Bitcoin is trading above $55,000 at press time, up less than 2% on the day. The digital asset is expected to see more price volatility following the upcoming release of Consumer Price Index (CPI) data on Wednesday and Producer Price Index (PPI) data on Thursday.

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