Bitcoin’s Power Law Model Shows Significant Deviation
- Bitcoin currently trades below $90,000, approximately 32% under the power law model value of $118,000.
- This deviation is the largest since August, when a similar trend resulted in a recovery period of three months.
- Historically, Bitcoin has overshot and undershot this model during market cycles but has remained closer to it this cycle.
- The previous stock-to-flow model has been invalid since January and suggested an unrealistic price of around $1.3 million per Bitcoin today.
The Bitcoin power law framework indicates long-term price trends based on historical performance, yet its future predictive accuracy remains uncertain due to market volatility.
Currently, Bitcoin’s price reflects a significant discount from the power law model, raising questions about potential mean reversion or further declines.(Source)
