On-chain analytics platform Glassnode reports that Bitcoin’s “Yardstick” indicator has dropped to its lowest level on record, significantly below previous market bottom ranges. The metric reflects the relationship between Bitcoin market capitalization and network security strength (hash rate). Current readings suggest that Bitcoin’s price may be undervalued relative to the network’s security investment.
Indicator Model and Valuation Logic
The Yardstick indicator, developed by Capriole Investments, is calculated by dividing Bitcoin’s market capitalization by hash rate and normalizing the data over a two-year period. Conceptually similar to a price-to-earnings ratio in traditional equity markets, it is used to evaluate Bitcoin’s valuation relative to its underlying infrastructure, helping identify potential overvaluation or undervaluation phases.
Historical Data and Market Cycle Signals
According to Glassnode, historically extreme low Yardstick levels have often coincided with contracting downside risk and long-term accumulation opportunities. Past cases indicate that Bitcoin prices frequently experienced notable cyclical rebounds after entering similar valuation zones. However, analysts emphasize that on-chain valuation indicators should be used as reference tools, complemented by macro liquidity conditions, market sentiment, and capital flow structures.
Importance of Risk Management and On-Chain Monitoring
During periods of valuation divergence, institutional investors typically strengthen monitoring of on-chain capital flows and abnormal transaction activity. Some teams utilize tools such as Trustformer KYT to track large fund movements and suspicious address behavior, supporting both investment decision-making and compliance oversight.
Conclusion
The Yardstick indicator’s record low offers a new perspective on Bitcoin valuation. While historical patterns suggest that extreme lows may present long-term opportunities, short-term trends remain influenced by macro conditions and market liquidity. Investors should maintain prudent risk awareness and balanced analysis.