Bitcoin's Price Reality: Adjusted for Inflation, It Never Crossed $100K, According to Alex Thorn

In a recent analysis, Alex Thorn, head of research at Galaxy, stated that Bitcoin has not truly crossed the $100,000 mark when adjusted for inflation. Despite reaching a historical high of over $126,000 in October, Thorn emphasizes that inflation significantly alters Bitcoin's perceived value.

Key Takeaways

Adjusting Bitcoin’s price for inflation shows it has never surpassed $100,000.
The Consumer Price Index (CPI) illustrates the decline in dollar purchasing power since 2020.
Inflation has contributed to the current higher prices of goods, with a dollar only able to buy 80% of what it could in 2020.
The US dollar has depreciated, impacting investment strategies in the cryptocurrency market.

Bitcoin ‘never crossed’ $100K if adjusted for inflation, says Alex Thorn

Understanding Bitcoin's Price Adjusted for Inflation

Thorn mentioned, “If you adjust the price of Bitcoin for inflation using 2020 dollars, BTC never crossed $100,000.” This statement is based on a detailed examination of the purchasing power decline measured by the Consumer Price Index (CPI). The CPI is a critical tool used by the US Bureau of Labor Statistics to track the cost changes in a basket of goods and services, which informs us about the country’s inflation levels.

According to the Bureau, the CPI rose by 2.7% over the past year, resulting in a significant reduction in the dollar's purchasing power, which has decreased approximately 20% since 2020.

BTC did not reach six figures if counted in 2020 dollars. Source: Galaxy Research

The Current State of US Inflation

As of now, prices for goods have risen by 1.25 times compared to 2020, per CPI data. This means that today's dollar only retains roughly 80% of its purchasing power from three years ago. Inflation peaked during the COVID-19 pandemic, crossing 9% in mid-2022, and it continues to exceed the Federal Reserve's target rate of 2%.

The Decline of the Dollar Index in 2025

The depreciation of the US dollar has intensified, as reflected in the Dollar Currency Index (DXY), which compares the dollar to several global currencies. TradingView data shows that the DXY has dropped 11% this year, reaching 97.8. It hit a three-year low of 96.3 in September and has been declining since October 2022, indicating that the dollar is weakening compared to other currencies.

This situation has prompted what investors call the “debasement trade.” This strategy involves purchasing assets believed to either maintain or increase in value as fiat currencies continue to lose their purchasing power.

Conclusion

Thorn's analysis sheds light on the nuanced dynamics of Bitcoin's perceived value against the backdrop of contemporary inflation. As inflation remains a topic of concern, understanding the real purchasing power of cryptocurrencies like Bitcoin becomes essential for investors and enthusiasts alike.