Bitcoin Trading 40% Below Energy Value Amid Market Recovery Signs
Bitcoin is currently trading approximately 40% below its modeled “energy value,” but indicators suggest a potential market turnaround, according to Charles Edwards of Capriole Investments. In his newsletter, he highlights a “Triple Put” involving support from the White House, Federal Reserve, and US Treasury that has shifted the risk profile for all assets while Bitcoin's on-chain and macro indicators are improving.
Market Sentiment
- Sentiment is notably low, with the American Association of Individual Investors’ bull–bear spread reflecting extreme bearishness similar to lows seen in 2009 and 2022.
- The CNN Fear & Greed Index shows its lowest reading in years.
- Capriole’s Active Manager Sentiment gauge indicates equity managers are at near-record under-exposure.
Edwards notes that such extreme sentiment often coincides with significant market bottoms.
Technical Analysis
- Bitcoin experienced a sharp reversal, reclaiming the $91,000–$100,000 range.
- A daily close above $91,000 would reinforce a bullish technical outlook.
- The Bitcoin Macro Index has turned positive after months in neutral territory, indicating a shift to bullish fundamentals.
Policy Developments
- The US implemented and then reversed global tariffs following market downturns, which Edwards refers to as the “Trump Put.”
- The Federal Reserve significantly reduced quantitative tightening, termed the “Fed Put.”
- The Treasury Secretary indicated readiness to mitigate Treasury market issues, referred to as the “Treasury Put.”
These three policy supports create a strong backstop for financial markets.
Valuation Insights
- Capriole’s Bitcoin Energy Value metric exceeds $130,000, highlighting Bitcoin's current undervaluation at around $94,000.
- This nearly 40% discount is rare in the first year following a halving event and has historically converged over time.
Despite potential political and volatility risks, Edwards maintains an optimistic outlook for Bitcoin, suggesting that if levels hold, new all-time highs could be approached soon. As of press time, Bitcoin is trading at $93,723.
