In a recent analysis, Alex Thorn, head of research at Galaxy, provided insights into Bitcoin’s peak price in October, which exceeded $126,000. However, when adjusted for inflation, Thorn argues that this figure does not truly reflect a break above the pivotal $100,000 threshold.
Thorn noted that in terms of 2020 dollars, Bitcoin’s price actually reached a maximum of $99,848. This observation highlights the impact of inflation on asset pricing and how nominal figures can sometimes mislead investors.
To arrive at this inflation-adjusted peak, Thorn utilized calculations based on the Consumer Price Index (CPI), which measures changes in the price level of a basket of consumer goods and services. He elaborated that the CPI’s data reflects a decline in purchasing power incrementally over the years, measuring each inflation print from 2020 to the present.
The Bureau of Labor Statistics recently reported a rise of 2.7% in the CPI over the past year, demonstrating the ongoing fluctuations in consumer pricing. Thorn discussed the broader implications of inflation since 2020, noting that the dollar’s purchasing power has decreased by approximately 20% over this period.
In addition to discussing Bitcoin’s performance, Thorn pointed toward the declining strength of the US dollar, as indicated by the Dollar Currency Index (DXY), which has dropped 11% year-to-date, currently sitting at 97.8. This marks a significant dip, with a noted three-year low of 96.3 reached in September. The falling value of the dollar has raised concerns among investors, leading some to adopt strategies that focus on perceived asset debasement amid ongoing economic uncertainty.
Thorn’s analysis underscores the complexities of asset valuation in a fluctuating economic landscape, particularly for those investing in cryptocurrencies like Bitcoin.
