Bitcoin's October surge past \$126,000 made headlines, but according to Alex Thorn, Galaxy Digital's Head of Research, the cryptocurrency's inflation-adjusted peak never actually broke the \$100,000 barrier. In a post on X, Thorn explained that when Bitcoin's price is adjusted using 2020 dollars, its highest point equates to \$99,848.

This analysis highlights the difference between nominal and real prices. The nominal price reflects Bitcoin's value at the time in current dollars. The real price, however, factors in inflation, giving a clearer picture of its true purchasing power over time. Thorn chose 2020 as the base year because it preceded the Federal Reserve's unprecedented monetary stimulus in response to the COVID-19 pandemic. Since then, inflation has significantly decreased the dollar's value, potentially making Bitcoin's price appear more impressive than its actual economic impact. The CPI has risen from 258.8 to over 320 since 2020, significantly reducing the dollar’s purchasing power.

According to the US Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 2.7% over the last 12 months. The dollar has lost approximately 20% of its value since 2020, meaning a dollar today only buys about 80% of what it could back then. To reach a true \$100,000 value in 2020 purchasing power, the market price would need to reach approximately \$125,000.

This inflation-adjusted perspective provides arguments for both Bitcoin enthusiasts and skeptics. Some argue that Bitcoin's rally from the 2022 lows appears less extreme when viewed in real terms, suggesting the bull cycle has room to run. Others contend that Bitcoin has failed to live up to its reputation as an inflation hedge, suggesting traditional stores of value like gold deserve renewed attention.

Currently, Bitcoin is trading around \$87,510, down from a one-week high of \$90,466. In nominal terms, Bitcoin was trading at \$87.7K recently, but in real terms, it was around \$70K. The cryptocurrency market remains sensitive to macroeconomic factors, including interest rate decisions and geopolitical events. Bitcoin ETFs are also driving institutional interest, leading to a structural market shift towards stability and reduced volatility.

Ultimately, Thorn's analysis emphasizes the importance of considering inflation when evaluating Bitcoin's performance. Investors should focus on actual purchasing power rather than nominal figures, especially in an era defined by persistent inflation and shifting monetary policy.