Bitcoin (BTC) recently faced significant price weaknesses over the weekend after the release of the August nonfarm payrolls (NFP) data, which did not meet analysts’ expectations. The cryptocurrency saw a sharp decline of nearly 5%, dropping below the $54,000 range, marking its lowest level since early August.
In response to the price volatility, the crypto market liquidated $200 million in long positions. This not only affected Bitcoin but also had an impact on the broader crypto market, with meme coins and AI sectors dropping by 6% and 7%, respectively.
Amid the price weakness caused by macroeconomic factors, analysts at Presto Research emphasized the apparent undervaluation of bitcoin. Peter Chung and Min Jung stated that the current market price of Bitcoin is “grossly undervalued,” pointing to network security as a key underlying value.
The analysts highlighted the discrepancies between the price of BTC and its underlying value. While the price may be volatile and short-term, the value, particularly network security, is relatively stable and changes slowly. Despite Bitcoin’s hashrate reaching an all-time high of 679 EH/s, the market seems to be undervaluing this fundamental aspect of the asset.
“Amid macro factors dominating BTC price talk lately, the market is overlooking one of the key fundamentals underpinning Bitcoin’s value – network security,” the analysts stated. Despite the network’s unprecedented security level, the hash price remains at a historic low of $39.01/PH/s/day.
The analysts concluded that investors should focus more on Bitcoin’s long-term value, which is supported by the network’s security and the increasing acceptance of the asset as “digital gold.” They believe that Bitcoin is undervalued at the moment, especially considering the ongoing trend of embracing digital gold.
At the time of writing, Bitcoin is trading above $55,000, with a less than 2% surge on the day. The digital asset is expected to experience further price volatility following the upcoming release of Consumer Price Index (CPI) data on Wednesday and Producer Price Index (PPI) data on Thursday.
Overall, while short-term price weaknesses are inevitable, it is crucial for investors to recognize the long-term value of Bitcoin, especially in terms of network security. Despite facing challenges in price fluctuations, the cryptocurrency’s fundamental strengths continue to underline its potential as a valuable and secure digital asset in the long run.
Leave a Reply