Fundstrat Proposes New Bitcoin Metric: the Price / Miner's Breakeven Cost

Fundstrat Proposes New Bitcoin Metric: the Price / Miner’s Breakeven Cost

Fundstrat Global Advisors has been at the vanguard of Wall Street’s ever-increasing embrace of crypto. Accordingly, Fundstrat’s research head Tom Lee just hailed the work of the firm’s Quantamental Strategist Sam Doctor, who’s created a new bitcoin metric, the Price / Miner’s Breakeven Cost, to help explain BTC’s price. 

Also read: Fundstrat’s Tom Lee Thinks Bitcoin Could Rally Above $15,000 Next Week

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A New Metric for Mining Economics

With Tom Lee at the helm of the firm’s crypto work, Fundstrat has become increasingly involved in cryptoverse analysis in recent months. Now, the firm’s getting downright scholastic in its cryptocurrency work.

Lee pictured.

That’s because Fundstrat’s Quantamental Strategist Sam Doctor, Twitter handle @fundstratQuant, has created a new technical metric that Lee and Fundstrat believe will help accurately explain bitcoin’s price appreciation in the months ahead.

The new metric is Doctor’s Price / Miner’s Breakeven Cost, or P/BE. The formula describes the BTC price at which bitcoin miners’ would “breakeven,” or profit, after their mining-related expenditures:

Lee’s Takeaways

In his tweet announcing the P/BE whitepaper, Tom Lee presented the executive summary of the document.

The summary highlighted several interesting assertions, including:

  • Fundstrat’s conclusion that the P/BE points to an “important support level” price-wise
  • The annual historical P/BE average of x1.8 suggests the bitcoin price may be ~$36,000 USD by the end of 2019

But Is It So?

Self-described economist and popular bitcoin pundit Tuur Demeester wasted no time in offering a healthy dose of skepticism to the P/BE, saying on Twitter that “mining activity responds to price, not vice versa”:

Even still, Demeester was open-minded, noting he looked “forward to reading the paper.”

Lee responded back to Demeester quickly, too, saying:

The suggestion being, of course, that Lee might be putting Demeester in touch with Doctor in the near future.

Going forward, we’ll have to wait and see if the P/BE takes off in crypto’s analytical circles.

What’s your take? Do you think the P/BE is worth consideration? Let us know what you think in the comments below. 


Images via Missoulian, CNBC

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