Bitcoin, which recently traded at $87,858.56, experienced a notable surge in October, reportedly surpassing $126,000. However, according to Alex Thorn, the global head of research at Galaxy Digital, when adjusted for inflation, Bitcoin’s true value has never actually crossed the six-figure threshold. Thorn highlighted in a post on X that the peak price in inflation-adjusted terms never exceeded $99,848, based on 2020 dollar values.
Thorn emphasizes the distinction between nominal and real prices. While the nominal price reflects the market value at the time, the real price accounts for inflation, providing a clearer picture of the asset’s purchasing power over time. This is particularly relevant when considering a constant reference point, such as early 2020, which Thorn selected due to the significant monetary policy changes initiated by the Federal Reserve in response to the COVID-19 pandemic.
The implications of this analysis could spark debate among both Bitcoin bulls and bears. Proponents of Bitcoin might argue that the cryptocurrency’s climb from the lows of 2022 is not as dramatically parabolic as it appears at first glance. This perspective could suggest that the recent high, despite the nominal figure of $126,000, may not indicate excessive market exuberance, leaving more potential room for upward movement.
Conversely, skeptics might interpret Bitcoin’s inflation-adjusted price performance as a sign that it is failing to fulfill its role as a hedge against the effects of dollar inflation. Critics may point to gold as a superior option for those seeking protection against currency devaluation. However, even gold has faced challenges in outperforming inflation over the last few decades, complicating the narrative for both asset classes.
This nuanced discussion underscores the importance of considering inflation when evaluating cryptocurrency investments, as market participants seek to understand Bitcoin’s true value in an evolving financial landscape.
