According to the 'Energy Value' metric from Capriole Investments, the fair value of Bitcoin is estimated to be $167,800, which is 45% higher than the current price. This statement has initiated discussions about the true valuation of the asset against the backdrop of current market behavior.
The 'Energy Value' Metric
'Energy Value,' developed by Charles Edwards, is based on the energy consumed by the Bitcoin network. Edwards states that 'Bitcoin should trade up to $167,800 per unit if its price fully reflected its energy value.'
Current Market Situation
Data from Glassnode reveals a record hashrate of 1.031 ZH/s and a discrepancy between market price and energy value. Currently, the average energy value is about $145,000, whereas the current price of Bitcoin is around $116,000, resulting in a 31% discount compared to the estimate.
Conditions for Price Increase
Despite current market discrepancies, signals from the Hash Ribbons metric remain optimistic. The 'buy' signal triggered at the end of July indicates favorable conditions for mining profitability. However, it is essential to consider that a decrease in hashrate could lead to a reduction in the calculated 'fair value,' limiting upside potential.
The gap between Bitcoin's market price and its energy value highlights both the strength of its technical fundamentals and the uncertainty inherent in speculative dynamics. Continued increases in hashrate may lead to a better price situation, but there is also a risk that the market may not keep pace with its fundamental indicators.
