Mike McGlone, chief commodity strategist at Bloomberg Intelligence, says Bitcoin (
) The relative discount to October’s high hash rate – the largest since the first quarter of 2020 – could soon see Bitcoin return to its “tendency to outperform most assets”.
In a tweet dated October 19, a Bloomberg analyst noted that Bitcoin’s ever-increasing hash rate — a measure of computing power and blockchain security — compared to its price “has a positive risk/reward impact.”
Many believe that, in theory, bitcoin’s hash rate should increase relative to its price.
McGlone pointed to the chart, noting that the 10-day average Bitcoin hash rate in October was “roughly equal to” what should be around $70,000. However, the price is currently $19,500 as of October 18th.
McGlone noted that this large gap between price and hash rate was last seen during the “Q1 2020 swoon,” a decline that preceded the meteoric rise that continued in 2020 and 2021.
McGlone suggested that perhaps what we’re seeing now is “a similar price base is being formed now”.
Bitcoin hash and price chart. Source: Bloomberg Intelligence.
The high growth rate, combined with increased demand, adoption and regulation, said the Bloomberg analyst known as the Eternal Bull means that bitcoin could enter a “relentless phase of its transition into the mainstream at a relatively discounted price.”
In a separate post on LinkedIn, McGlone said it “may be a matter of time” before Bitcoin returns to its tendency to outperform most major assets, commenting:
“It may be a matter of time before it reverts to its tendency to outperform most assets as widespread adoption progresses and adaptive changes to US accounting standards give it a boost.”
McGlone also said that the price of bitcoin “should continue to rise over time” due to the laws of supply and demand, adding that the cryptocurrency is showing signs of rising in the fourth quarter of 2022.
Related: Bitcoin likely to transition to a risk-free environment in the second half of 2022, says Bloomberg analyst
“It is no surprise that a relatively new asset that has risen sharply has fallen due to the rapid tightening of the Federal Reserve in 2022, but bitcoin is showing signs of bottoming and diverging in strength in the fourth quarter,” he explained.
Earlier, a Bloomberg analyst suggested that BTC was a “wild card” and “mature” to be surpassed once traditional stocks finally fell, and predicted that BTC could reach $100,000 in 2022 when the digital currency completes its transition. From an asset with risk to an asset without risk.