Bitcoin Yardstick Signals Deep Undervaluation as Hashrate Slumps

Bitcoin Yardstick, a valuation metric described by Capriole Investments’ Charles Edwards as “PE-like” (market cap divided by normalized Hashrate), is flashing “deep value.” The metric has fallen to below the mean minus one standard deviation, implying BTC is historically cheap versus the network’s mining energy work. Edwards says this level is deeper than during the 2022 bear market, but he warns it does not guarantee an immediate bottom. In the prior cycle, Bitcoin Yardstick stayed undervalued for months before turning. The article also notes a short-lived rebound in the Yardstick in late January while BTC traded sideways. It attributes that anomaly to a major US snowstorm that disrupted electricity supply, forcing miners to cut power and temporarily reduce Hashrate. After power conditions improved, the Yardstick later dropped again when BTC sold off into early February. At the time of writing, BTC has rebounded toward the ~$71,000 area after a quick retracement. For traders, the main takeaway is valuation support potential from the disconnect between depressed price and resilient mining activity, but timing remains uncertain.