Capriole Investments founder Charles Edwards said his proprietary Bitcoin Yardstick valuation metric has dropped to record lows — deeper than any reading during the 2022 bear market — suggesting Bitcoin (BTC) is more undervalued relative to the energy securing its network than at any prior point the indicator has tracked.

Edwards' Yardstick Metric

The Bitcoin Yardstick functions as a price-to-earnings-style ratio for BTC, substituting corporate earnings with the total computing power — known as hashrate — that miners contribute to secure the blockchain. The indicator divides the network's market capitalization by its hashrate to gauge whether the asset is overpriced or underpriced relative to the work required to maintain it.

Edwards shared a chart on X showing the metric has fallen below negative one standard deviation from its historical mean, a zone his model classifies as "cheap value."

The reading has dropped lower than any level recorded during the 2022 bear market. "Bitcoin yardstick is literally off the chart in deep value," Edwards wrote.

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Why Deep Value May Not Mean a Bottom

A sustained undervalued reading does not guarantee an immediate price reversal. During the previous bear market, the Yardstick remained in the cheap-value zone for months before BTC began to recover.

One anomaly in the data appeared in late January, when the metric briefly spiked toward normal-value territory.

BTC's price was flat at the time; the move was driven by a sharp drop in hashrate after a major snowstorm in the United States disrupted the power grid and forced miners to cut electricity usage.

The hashrate recovered quickly, but the Yardstick plunged again as Bitcoin's price fell sharply at the start of February. BTC was trading near the $71,000 level after a rebound over the prior day.

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