Bitcoin is Entering Risky Territory

Bitcoin's price relative to its energy value is looking risky right now.

The Bitcoin Yardstick is like a “PE Ratio,” except instead of earnings, the Bitcoin Yardstick uses the ratio of energy work done to secure the network in relation to price.

Bitcoin Yardstick = market cap/hash rate, normalized over 2 years of data.

General heuristic:

1. Cheap: Yardstick > 1 deviation under the mean

2. Risky: Yardstick > 2 deviations above the mean

3. Expensive: Yardstick > 3 deviations above the mean

The right time to accumulate was when the Yardstick was > 1 deviation under the mean, i.e., all of last year and early this year.

Can probably still make money buying BTC now, but on a risk-adjusted basis, there are probably higher opportunity cost uses of funds.

H/t to @glassnode for the data and @caprioleio for popularizing this metric.

What do you guys think? @0xandrewmoh, @0xmughal, @2lambro, @arndxt_xo, @crypto_linn, @cryptogideon_, @cryptomanran, @dynamo_patrick, @hmalviya9, @jake_pahor, @krybharat, @milesdeutscher, @rektdiomedes, @saushank_, @the_smart_ape, @thedefiplug