Charles Edwards, founder of Capriole Investments, says his Bitcoin Yardstick metric is “off the chart in deep value” — a signal that has traders and analysts taking notice.
What is the Yardstick? Edwards’ Yardstick is a valuation metric for Bitcoin that works like a price-to-earnings ratio, but replaces “earnings” with the energy work that secures the network. Practically, it’s the ratio of Bitcoin’s market capitalization to the network’s Hashrate (the total computing power miners bring to the blockchain). That makes the Yardstick a way to gauge BTC’s market value relative to the amount of work being spent to secure it.
Edwards shared a chart showing the Yardstick collapsing over the past few months as Bitcoin’s price turned bearish. The indicator has been trading below minus one standard deviation from its historical mean — a zone his model labels “cheap value.” While the 2022 bear market pushed the Yardstick into this undervalued region, the recent troughs have fallen even lower than those 2022 lows, prompting Edwards’ “off the chart in deep value” remark.
That said, deep value readings aren’t a guaranteed buy signal. In 2022 the Yardstick lingered in undervalued territory for months before a sustained rebound, so a low reading doesn’t necessarily mark an immediate market bottom.
The chart also shows a sharp, temporary uptick in late January: BTC’s price was largely flat, so the move was driven by Hashrate fluctuations. A severe U.S. snowstorm that disrupted power grids forced miners to dial back operations, briefly reducing Hashrate and pushing the Yardstick into a more “normal” range. Hashrate recovered quickly, but then an early-February price crash sent the Yardstick plunging again.
Bitcoin has since staged a rapid rebound and is trading around $71,000 following the recent recovery. Whether the Yardstick’s deep-value reading presages a durable rally or another extended downturn remains contingent on both price action and miners’ activity moving forward.
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