Bitcoin Logarithmic Chart with High/Low 3rd Order Regression Models
I would like to start off with mentioning that this analysis has been done numerous times by other people, but I have found it to consist of old data. I have decided to furthermore improve it with up to date price action.
Understanding the Chart First, it's critical to note that the chart is not your standard linear graph. It's a logarithmic scale, which means each increment on the price axis represents an exponential increase. This type of scale is particularly useful for Bitcoin, as it has seen exponential growth stages and allows us to see patterns that aren't immediately obvious on a linear scale. This chart includes third order regression curves (green/red) that best fit the highs and lows of bitcoin.
Depicting the Power-Law Growth Corridor Central to the chart is the concept of the 'power-law growth corridor,' which represents a regression analysis performed in logarithmic space. This model helps in visualizing the trend lines that Bitcoin prices have historically followed, providing a 'best fit' for both the highs and lows. The model produces a corridor which has captured the upper and lower bounds of Bitcoin's price movements for over a decade.
Diminishing Returns and Price Stability The patterns that emerge from the graph indicate a cycle of diminishing returns after each bull run, which points to a maturing market. 599x in the 2012-2014 bull run, 100x in the 2015-2018 bull run, 21x in the 2019-2022 bull run, and what regression analysis suggests to be a 9-11x from the low in this bull run (2023-2026). With each cycle, the percentage increase from the previous peak has reduced. This corresponds with the concept that as Bitcoin becomes more widely adopted, extreme fluctuations are dampened by the larger and more liquid market.
Halving Events and Market Cycles The halving events, which occur approximately every four years and cut Bitcoin mining rewards in half, are also marked on the chart. Historically, these events correlate with the middle of bull market cycles. This correlation is significant because it impacts the supply side of Bitcoin, contributing to a reduction in new coins entering the market, which, in theory, leads to upward pressure on prices.
A Stabilizing Market Examining the power-law corridor over time, we can observe a stabilizing effect on the volatility of Bitcoin's price. Despite the general perception that cryptocurrencies are prone to unpredictable swings, the regression curves show a consistent trajectory that offers a glimpse into potential future movements. Combining this regression model and our understanding of the correlation between the halving events and historical bull runs, this analysis can suggest a $150-175k bitcoin top with the bull run possibly coming to an end in Q4 2025. This is not financial advice.
Conclusion The graph offers not a certainty, but a grounded estimate of Bitcoin's trajectory. While unexpected events can always cause deviations, the power-law growth corridor suggests a somewhat predictable pattern of growth, with volatility slowly reducing.
I'm interested by your perspectives and interpretations of this analysis—let's discuss where we see Bitcoin going next.
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