Bitcoin may have traded above $126,000 in October, but according to Alex Thorn, global head of research at Galaxy Digital, its true value – once inflation is taken into account – has never exceeded the six-figure mark.
“If you adjust the price of Bitcoin for inflation using 2020 dollars, BTC has never exceeded $100,000,” Thorn wrote in an article on X. “It actually exceeded $99,848 in 2020 dollars.”
Thorn highlights the difference between nominal and real prices. The nominal price reflects the cost of bitcoin at the time, in dollars of that year. The real price, on the other hand, adjusts for inflation, giving a more precise idea of the purchasing power of the asset compared to a constant year like 2020.
Why choose the beginning of 2020 as a start? Thorn said this was just before the Fed’s Covid response was broadly released.
Possible takeaways
The data could provide fodder for both bulls and bears. Bulls could say that Bitcoin’s rise from 2022 lows is not as parabolic as previously thought. So this could suggest that there is much less froth at the nominal $126,000 level in October and much more room for the upward move to continue.
Bears, on the other hand, might say that Bitcoin’s weaker inflation-adjusted performance means the asset is not living up to its hype as a hedge against dollar printing. Stick with gold, they might add, even though the yellow metal – booming right now – has had its own problems outperforming inflation over the past few decades.
