The person behind the well-known “Bitcoin Power Law” has revealed a chart outlining specific Bitcoin price predictions according to his model for the upcoming market cycles.
Based on the model’s analysis, Bitcoin is projected to hit a peak price of around $218,875 in November 2025. After reaching this high point, the price is expected to drop and reach a low of approximately $96,677 in December 2026.
What Is The Bitcoin Power Law?
The Bitcoin Power Law is a long-term price model that forecasts Bitcoin’s future market value as if it were bound by the laws of physics. The man behind the model – Giovanni Santostasi – is a former physics professor, who believes Bitcoin’s long-term price trajectory follows a “power law” relationship with time.
“According to Santostasi’s tweet on Monday, price, hash rate, and adoption follow the pattern of a power law. We comprehend the reason behind this and have developed a theory to explain it.”
A power law signifies a strong relationship between two variables where one variable is consistently multiplied by the same power of the other variable. For instance, in the law of planetary motion, a planet’s distance from the sun and the duration of its orbital period around the sun are linked such that the orbital period is directly related to a specific power of the planet’s distance from the sun.
In simpler terms, power laws have been found to apply in finance as well. These laws help determine the average length of time it takes for a stock’s price to shift direction.
The Bitcoin Power Law Theory proposes that the laws governing Bitcoin’s price behavior remain constant regardless of time scales. This means the theory could potentially predict Bitcoin’s price range indefinitely. For instance, according to this model, Bitcoin may reach a peak price of $1,212,799 in November 2033, followed by a retracement down to $802,399 in December 2034.
Santostasi argues that the Power Law model for Bitcoin is not just a simple “model,” but rather a comprehensive “theory” explaining Bitcoin’s nature and functioning. The price floor in this theory isn’t determined by technical analysis, but instead by the “physics of mining” and the concept of “miner surrender.”
The physicist spent a significant amount of time creating relevant Bitcoin metrics by combining its power law and cyclical characteristics, as expressed through the Bitcoin clock on Tuesday.
What About the Stock to Flow Model?
Santostasi holds a contrasting perspective towards well-known pricing models like Plan B’s “stock-to-flow” model. This approach projects substantial future growth for Bitcoin without any reduction in returns. The model aims to estimate Bitcoin’s price based on the decreasing availability of new Bitcoins post each halving event, which reduces inflation.
The “Pi Cycle Top” technical indicator used for predicting market peaks in Bitcoin has shown remarkable accuracy in the past, according to some claims.
According to Santostasi, expressed on Tuesday, the S2F theory is fundamentally flawed conceptually, logically, and mathematically. From a practical standpoint, it’s misleading and almost harmful because it provides incorrect information about Bitcoin. Essentially, it’s an illusion and a deception.
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2024-04-24 21:42