Bitcoin Undervalued by 24% to 66%, Says CEO

Bitcoin undervalued by 24%–66% vs gold and global money supply, suggests potential price reversal—analysis by Jan3 CEO.

Bitcoin's Potential Upside Compared to Gold

According to Samson Mow, CEO of Jan3, a Bitcoin technology company, the cryptocurrency is currently undervalued relative to both gold and the global money supply. Mow’s analysis suggests that Bitcoin could see a price reversal given its favorable comparison to these benchmarks.

Relative Undervaluation Metrics

Mow asserts that Bitcoin's value is approximately 24% to 66% below what it should be based on comparisons with gold's market capitalization and the global money supply. Gold futures for April delivery closed at $5,247.90, while tokenized gold PAX Gold USD was trading at $5,404.14.

Z-Score Analysis: A Key Indicator

A significant metric cited by Mow is the Bitcoin-to-gold ratio's Z-score, which measures how far the price of Bitcoin deviates from its historical average relative to gold. When the Z-score falls below -2, it has historically signaled major price rallies for Bitcoin. As of the writing, the Z score stands at approximately -1.24.

Historical Patterns: Past Predicts Future?

Historical data from TradingView highlights a pattern where a low Z-score has preceded significant increases in Bitcoin's value. For instance, during the FTX collapse in November 2022, when the Z score of the BTC-to-gold ratio fell below -3, Bitcoin rallied by over 150% in the following year. Similarly, during the coronavirus market crash in March 2020, a drop below -2 saw Bitcoin reach a low of about $3,717 before surging by over 300% within a year.

Contrarian View vs Market Sentiment

Contrary to other analysts who predict further declines for Bitcoin due to investor uncertainty and geopolitical tensions, Mow’s analysis suggests a different trajectory. The price action observed recently might be mirroring the 2022 bear market, with some analysts predicting that BTC could fall to $50,000.

Outlook: A Potential Price Target

While some experts forecast Bitcoin may drop further due to current market conditions, Mow’s contrarian stance holds out hope for a significant upward movement. The potential for another major thrust to $150K, as suggested by other sources, adds depth to the debate on Bitcoin's future price.

Conclusion: A Balanced Perspective

The current undervaluation of Bitcoin relative to gold and historical Z-score patterns offer a compelling argument that the cryptocurrency could see substantial gains in the near term. However, investors should remain cautious given the volatile nature of the crypto market and ongoing geopolitical uncertainties.

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