The lead commodity strategist is bullish on Bitcoin, revealing on Oct. 18 that its relative hash rate discount has reached levels not seen since Q1 2020.
Mike McGlone, senior commodity strategist at Bloomberg Intelligence, says that Bitcoin
The discount relative to its high hash rate in October, the highest since Q1 2020, could soon see Bitcoin return to “its trend of outperforming most assets.”
In a Twitter post on Oct. 19, the Bloomberg analyst suggested that Bitcoin’s ever-increasing hash rate, a measure of a blockchain’s processing power and security, relative to its price points” are favorable to the risk/reward ratio.
Many believe that in theory Bitcoin’s hashrate should increase relative to its price.
McGlone pointed to a chart noting that the 10-day average of Bitcoin’s hash rate in October is “roughly equivalent” to the level that should be around $70,000. However, the price is currently $19,500 as of October 18.
McGlone noted that such a large gap between price and hash rate was last seen during the “Q1 2020 swoon,” a crash that preceded a meteoric rise that lasted into 2020 and 2021.
McGlone hinted that we may now be seeing a “similar price base forming now.”
Graph of the price history and hash rate of bitcoin in euros. Source: Bloomberg Intelligence
The Bloomberg analyst known as Perma Bull said high foreclosure rates coupled with increased demand, adoption and regulation mean that Bitcoin is entering an “inexorable phase of its migration to the mainstream and to a relatively low price.
In a separate post on Linkedin, McGlone said that “it may be a matter of time” before Bitcoin returns to its trend of outperforming most major assets, commenting:
“Returning to its propensity to review most assets may be a matter of time as mainstream adoption proceeds and adaptive changes in US accounting standards drive it forward.”
McGlone also said that the price of Bitcoin “should continue to rise over time” with the laws of supply and demand, adding that the cryptocurrency shows signs of “bottoming out” in Q4 2022.
Related: Bitcoin Likely to Transition to Risk Asset in H2 2022, Says Bloomberg Analyst
“It’s no surprise that a relatively new asset that rose to prominence has declined due to the Fed’s rapid pace of 2022 tapering, but Bitcoin shows signs of bottoming and divergent strength in Q4,” he said. explained.
Previously, the Bloomberg analyst suggested that BTC is a “wild card” that is “ripe” to outperform when traditional stocks finally drop, predicting that BTC had the potential to hit $100,000 in 2022 when the digital currency completes its transition. from a risky asset to a risky one.