Bitcoin Power Law

Track it here: link

Bitcoin price allegedly follows a mathematical Power Law function. At the time of writing this, the price of bitcoin does indeed follow this pattern. The idea is that bitcoin price follows historical data and a mathematical function of powers of this historical price.

Key ideas of the Bitcoin Power Law:

• Logarithmic Growth - The price of bitcoin over time grows logarithmically. That is, it grows exponentially. Subsections of the graph of bitcoin price that represent equally timed spaces apart on the X axis should represent an equal ratio in price difference. e.g., 2015-2017 growth and 2019-2021 growth.
• Long Term Predictions - People use this expected logarithmic growth to make long term bets on bitcoin. Of course you see short-term volatility, but in the long-term it’s expected to follow this pattern.
• Power Law Corridor - : Some implementations of the Bitcoin Power Law create a “corridor” using upper and lower bounds to estimate where the price might fluctaneously rise or fall. This corridor widens over time, reflecting increasing absolute price volatility but potentially decreasing relative volatility.
• Statistical Analysis: The theory is allegedly grounded in statistical analysis and regression models that fit bitcoin’s historical price data to a power law distribution. Proponents of this model argue that despite Bitcoin’s volatility, its growth trajectory has remained consistent with such a distribution.

This is, of course, just a statistical model and an expectation that future market behavior will be similar to the past. Follow that link to track bitcoin price against the power law. If it ever falls out of the corridor, then sell your bitcoin.