According to on-chain analyst Charles Edwards, the Bitcoin indicator "Bitcoin yardstick" is showing a familiar pattern to 2019 lows.
The Bitcoin yardstick is a rule-of-thumb Bitcoin valuation tool. The valuations present for Bitcoin currently coincide with 2019, when it traded near the $4K mark.
The Bitcoin Yardstick is painting a very familiar signature to the 2019 lows 👀 pic.twitter.com/0TDrR0e4ft
— Charles Edwards (@caprioleio) March 31, 2023
Similar in concept to a PE Ratio, except instead of stock earnings, the Bitcoin Yardstick estimates the ratio of energy work done to secure the Bitcoin network in relation to price.
In context, lower readings indicate cheaper Bitcoin, which implies a bullish market.
According to a chart presented by Edwards, the current readings are low - similar to those of 2019.
This implies that, on a relative basis, Bitcoin is extraordinarily cheap given the amount of energy being used on what is the most powerful computer network in the world. Concerning price, this might suggest Bitcoin is undervalued.
What's next?
As reported, Charles Edwards hinted that January might have marked the start of the bull run for Bitcoin.
He says this might have marked a major turning point, the start of a new regime, but it will not be a straight line upward: "Early bull markets can be somewhat boring and slow moving. Don’t expect the fireworks of January to be consistent throughout the year; it may well be a grind, and there will be pullbacks."
In a blog post, he adds that the more significant returns for Bitcoin might come in 2024.
As options worth billions of dollars expired on Friday and some traders placed bearish wagers on Bitcoin's wrapped Ethereum-based version, WBTC, the price of the cryptocurrency was under pressure.
At the time of writing, the leading cryptocurrency by market value was marginally up in the last 24 hours at $28,444 as bulls stepped in to quickly buy the dip.
Alex Dovbnya
Yuri Molchan