Bitcoin may have traded over $126,000 in October, but according to Alex Thorn, global head of research at Galaxy Digital, its true value – once inflation is factored in – has never passed the six-figure mark.
“If you adjust the price of bitcoin for inflation using 2020 dollars, BTC never crossed $100K,” Thorn wrote in a post on X. “It actually peaked at $99,848 in 2020 dollar terms.”
Thorn points out the difference between nominal and real prices. The nominal price reflects what bitcoin cost at the time, in that year’s dollars. The real price, on the other hand, adjusts for inflation – giving a more accurate sense of the asset’s purchasing power compared to a constant year like 2020.
Why choose the beginning of 2020 as a start? Thorn said it was just before the Fed’s big write-up in response to Covid.
Possible takeaways
The data could provide fodder for both bulls and bears. Bulls might say bitcoin’s run higher from the 2022 lows isn’t quite as parabolic as previously thought. That could therefore suggest much less froth at the nominal $126,000 high in October and much more room for the bull to continue.
Bears, on the other hand, may say 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 — on a hot run right now — has had its own problems that have outpaced inflation in recent decades.
