Bitcoin (BTC) faced a significant price drop over the weekend due to the release of August nonfarm payrolls (NFP) data that did not meet analysts’ expectations. The cryptocurrency saw a sharp decline of almost 5% after the NFP data release, dropping below the $54,000 range, which was its lowest level since early August. This price weakness also had a ripple effect on the broader crypto market, with meme coins and AI sectors experiencing a 6% and 7% drop, respectively.
Amidst the price volatility driven by macroeconomic factors, analysts at Presto Research pointed out that the market seems to be undervaluing bitcoin. Peter Chung and Min Jung from Presto Research believe that the current market price of BTC is “grossly undervalued,” citing network security as a key underlying value. Despite Bitcoin’s hashrate reaching an all-time high of 679 EH/s, indicating increased network security, the market is undervaluing this fundamental aspect of the asset. The analysts highlighted the disconnect between the volatile short-term price of BTC and its relatively stable, slowly changing underlying value.
The analysts emphasized the importance of focusing on Bitcoin’s long-term value, which is supported by the network’s security and the growing acceptance of the asset as “digital gold.” They mentioned that while short-term price weaknesses are inevitable, investors should consider the broader trend of embracing Bitcoin as digital gold over the years. The availability of spot ETFs further strengthens Bitcoin’s position as a valuable asset, indicating that the cryptocurrency may be significantly undervalued at the moment.
At the time of writing, Bitcoin was trading above $55,000, showing a less than 2% increase on the day. The digital asset is expected to experience more price volatility in the coming days following the release of Consumer Price Index (CPI) data on Wednesday and Producer Price Index (PPI) data on Thursday. These economic indicators could influence Bitcoin’s price movement in the short term, adding to the existing market uncertainties.
Bitcoin’s recent price weaknesses are a result of various factors such as macroeconomic data releases and market reactions. While short-term price fluctuations are common, the underlying value of Bitcoin, particularly its network security and adoption as digital gold, should not be overlooked. Investors are advised to consider these fundamental aspects when evaluating Bitcoin’s true worth in the market.