Bitcoin currently trades at about a 30% discount compared to its fair value as implied by the Nasdaq 100. Any high-conviction Bitcoiner already knows how cheap the asset is currently, but this ratio proportionately highlights the knocked down BTC price. And this is a divergence that has historically implied serious underestimation.
Based on its long-term correlation with technology-focused indexes, Bitcoin’s fair value hovers around $156,000, while today’s spot price hovers around $110,000, according to data from Econometrics.
The last time we saw such a difference was in 2023, before the big uptick. In econometrics it is stated that:
“Unless you think the bull market is over, this gap is likely to narrow as Bitcoin catches up.”
Bitcoin has underperformed tech stocks in recent weeks, but its correlation with major U.S. indexes remains intact, according to Bloomberg data. This suggests that the market is recalibrating rather than collapsing. Bitcoin’s roughly 30% discount to fair value implied by Nasdaq represents one of the largest valuation gaps in the past two years. If risk appetite returns, that money could flow into Bitcoin.
Open interest wipeout
The October flash crash wiped out more than $12 billion in open interest, making it one of the steepest contractions in Bitcoin derivatives history. Due to widespread deleveraging, open interest in futures fell from $47 billion to $35 billion.
Many analysts interpret this as a bullish reset. Leverage has been flushed, leaving room for organic spot demand and new ETF inflows. BitMine and Fundstrat’s Tom Lee told CNBC that while “massive deleveraging events” are still plaguing the crypto market, with strong fundamentals for Bitcoin and Ethereum and open interest currently at record lows, “we will see a rally in crypto by the end of the year.”
Additionally, open interest in options currently exceeds futures by $40 billion, a sign of market sophistication and declining speculative leverage. As Glassnode points out:
“The Bitcoin derivatives landscape is changing as option OIs begin to compete with futures. The market is moving towards risk- and volatility-defined strategies, which means option flows, rather than futures liquidations, will have more influence in shaping price action.”
Gold to Bitcoin rotation: Macro reallocation
Meanwhile, gold’s record rally appears to be losing momentum. Bloomberg reported on October 22 that even “hardcore gold bulls” admit the rally has gone too far after the bullion market suffered its steepest weekly decline in more than a decade.
Analysts told Reuters earlier this month that the extraordinary rally above $4,000 an ounce is forcing investors to reconsider the sustainability of the move, with many now turning to high-beta assets such as Bitcoin.
Investor Anthony Pompliano said a “great rotation” from gold to Bitcoin is imminent, noting that Bitcoin often lags gold by about 100 days in its performance cycle. This quarter’s settings closely match that historical pattern. Gold has been outperforming for months, and Bitcoin’s undervaluation relative to equities currently looks like the perfect storm for reallocation.
Young investors’ preference for digitally native assets, combined with Bitcoin’s greater portability and finite supply, reinforces this structural trend. As gold pauses and liquidity seeks higher beta stores of value, Bitcoin is once again the natural destination.
Unusual configuration of BTC price for long-term investors
History shows an opportunity when BTC price is significantly below the fair value suggested by Nasdaq. The 30% discount hasn’t happened in nearly two years. With open interest cleared, leverage reset, and steady inflows from institutional investors, the situation resembles an accumulation phase rather than a high ceiling.
If the bull market narrative holds true, Bitcoin could quickly close the valuation gap in the coming months, similar to previous cycles after large deleveraging events. As markets reassess risks, the rotation from gold to Bitcoin could act as a catalyst to ignite the next rally.