Do you buy Bitcoin because its price goes up or because its network is secure? Most people only look at Price, but price is just the surface. The Bitcoin Yardstick is a unique onchain metric that lets you look at the engine underneath. It compares Market Cap to Hashrate to determine if Bitcoin is fundamentally cheap or expensive.
๐ธ This indicator works similarly to the P/E ratio in stocks, but for an energy network.
Yardstick = Market Cap / Hashrate
Cheap Zone below 0.5 standard deviation ๐ Hashrate is growing strongly, yet Bitcoin price is flat or dropping. The network is becoming safer than ever, but the market is valuing it low. This is a positive divergence and a generational buying opportunity.
Expensive Zone above 2.0 standard deviation ๐ Price is rising too fast relative to Hashrate growth. Value is being inflated by speculation.
๐ธ Imagine Hashrate is the Muscle and Price is the Clothing.
When a child grows up but still wears old, tight clothes, sooner or later those clothes will rip apart for the body to burst out. That is when Price Discovery happens to catch up with intrinsic value.
๐น If you see Bitcoin price drop 20% while Hashrate hits a new ATH, do not fear. That is the most Bullish signal you can find. Be greedy when this metric hits the Cheap zone.
Do you know where Bitcoin Hashrate is currently at?
News is for reference, not investment advice. Please read carefully before making a decision.
