Bitcoin (BTC) experienced significant price weaknesses over the weekend following the release of August nonfarm payrolls (NFP) data, which fell below analysts’ expectations.
Following the release of the NFP data, BTC saw a sharp decline of nearly 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 meme coin and AI sector sectors dropping 6% and 7%, respectively.
Short-Term Focus
Amidst this price weakness fueled by macroeconomic factors, analysts at Presto Research highlighted the market’s apparent undervaluation of bitcoin. The analysts Peter Chung and Min Jung believe the current market price of the pioneering cryptocurrency is “grossly undervalued,” citing one key underlying value: “network security.”
In a report on September 9, they pointed out discrepancies between the price of BTC and its underlying value. While the former, which investors are currently focused on, is volatile and short-term, the value, on the other hand, is “relatively stable” and changes slowly.
Per 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, the analysts stated that the market seems to be undervaluing this fundamental aspect of the asset as evidenced by the pricing (measured by the hash price) of this security—which is at a historic low.
“Amid macro factors dominating BTC price talk lately, the market is overlooking one of the key fundamentals underpinning Bitcoin’s value – network security. The hashrate, the computational power that secures the network, has hit an all-time high of 679 EH/s, making it the most secure network by far on the planet. Yet, the market is oblivious to this, as shown 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 weaknesses are inevitable, investors should focus more on BTC’s long-term value, which is underpinned by the network’s security and the growing acceptance of the asset as “digital gold.”
“The world has spent the last 15 years slowly but surely embracing the concept of ‘digital gold’; if you believe that trend will continue (in fact, the availability of spot ETF means we are in a much better setup than ever before), BTC seems grossly undervalued at the moment,” they said.
Bitcoin trades above $55,000 at press time, marking a less than 2% surge on the day. The digital asset is expected to see further price volatility following the upcoming release of Consumer Price Index (CPI) data on Wednesday and Producer Price Index (PPI) data on Thursday.