Bitcoin ‘Grossly Undervalued’ Due to Network Security Insights

Bitcoin (BTC) faced notable price declines over the weekend after the release of August’s nonfarm payrolls (NFP) data, which fell short of analysts’ predictions.

In the wake of the NFP report, BTC experienced a sharp drop of nearly 5%, trading below the $54,000 mark, its lowest point since early August. The resulting market volatility led to the liquidation of $200 million in long positions across the crypto space. This downturn also impacted the wider crypto market, resulting in a 6% decrease in meme coins and a 7% decline in the AI sector.

Short-Term Focus

Despite this price downturn driven by macroeconomic factors, analysts at Presto Research underscored the apparent undervaluation of Bitcoin in the current market. Analysts Peter Chung and Min Jung expressed that the present market price of the leading cryptocurrency is “grossly undervalued,” emphasizing a key fundamental: “network security.”

In a report dated September 9, they highlighted the discrepancies between BTC’s price and its underlying value. While the price is influenced by short-term volatility, the underlying value remains “relatively stable” and is subject to slow changes.

Recent data indicates that Bitcoin’s hashrate reached an unprecedented high (ATH) of 679 EH/s. Though this suggests that the network is more secure than ever, the analysts remarked that the market appears to be undervaluing this critical aspect of the asset, as shown by the historically low hash price corresponding to this security.

“With macro factors dominating the current discussions around BTC prices, the market seems to be overlooking one of Bitcoin’s core fundamentals – network security. The hashrate, which measures the computational power securing the network, has achieved an all-time high of 679 EH/s, establishing it as the most secure network on the planet. However, the market remains indifferent, as evidenced by the historic low hash price of $39.01/PH/s/day,” they noted in the report.

Long-Term Value

The analysts concluded that while short-term price fluctuations are unavoidable, investors should prioritize BTC’s long-term value, which is supported by network security and the growing acceptance of Bitcoin as “digital gold.”

“Over the last 15 years, the world has gradually embraced the notion of ‘digital gold’; if you believe this trend will persist (especially with the introduction of spot ETFs, we are in a more advantageous position than ever), BTC currently appears significantly undervalued,” they asserted.

As of now, Bitcoin is trading above $55,000, representing a nearly 2% increase for the day. The digital asset is anticipated to undergo further price fluctuations following the upcoming release of Consumer Price Index (CPI) data on Wednesday and Producer Price Index (PPI) data on Thursday.