High Bitcoin to hash rate discount, highest since early 2020

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, says bitcoin’s (BTC) relative discount to its high hash rate in October (the largest since the first quarter of 2020) could soon see bitcoin recover.

In a Twitter post October 19, the Bloomberg analyst did recommended that bitcoin’s increasing hash rate (a measure of blockchain processing power and security) may have favorable consequences relative to its “risk/reward” price points. »

Many believe that bitcoin’s hash rate should be rising relative to its price.

McGlone pointed to a chart indicating that the 10-day average bitcoin hash rate in October is “almost equivalent” to where it should be at around $70,000. Now, the price is currently at $19,500 as of October 18th.

McGlone pointed out that such a discrepancy between price and hash rate was last seen during the “confusion of the first quarter of 2020”, i.e. the bottom that preceded the meteoric rise that lasted through 2020 and 2021.

McGlone suggested that we may be creating a “similar price base” now.

The Bloomberg analyst, known as a perma bull, said that high break-out rates, as well as rising demand, adoption and regulation mean that bitcoin may be entering an “inevitable phase.” of his migration to the general public and at a reasonably reduced price. »

In a separate Linkedin post, McGlone said it was “perhaps only a matter of time” before bitcoin reverses its tendency to outperform most major assets, commenting:

“It may be a matter of time before it tends to outperform again and again as widespread adoption continues and is fueled by adaptive changes in US accounting standards. »

McGlone has too declared that the price of bitcoin should continue to rise over time given the laws of supply and demand, adding that the cryptocurrency shows signs of “bottoming out” in the fourth quarter of 2022.

Also read: According to Bloomberg analysts, bitcoin is expected to become a risk-free asset in the second half of 2022.

“Not surprisingly, the rapid pace of Federal Reserve tightening in 2022 led to a decline in a relatively new asset, but bitcoin has shown mixed signs of grounding and strength in the fourth quarter. “, he explained.

Previously, the Bloomberg analyst suggested that BTC is “wild,” and “ripe” to outperform when traditional stocks are at the bottom. He also predicted that BTC could reach $100,000 in 2022 as the digital currency completes its transition from a risky to a risk-free asset.