BTC Power Law Analysis: Convergence of Slope Models

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This chart shows two sets of bands overlaid. The first, with blue bands and white central line, tracksBitcoin's price movements through predefined values associated with the BTC Power Law. The code I used came from @savingface on Discord, where it was scripted to adheres closely to Bitcoin Power Law slope observed by Giovanni Santostasi, and written about on Medium. It overlays a set of bands derived from moving averages that take in all of BTC's historical price data.

Notably, when the x axis is also made logarithmic, the Power Law curve becomes linear. It is a limitation of TradingView that only the y axis can be viewed in logarithmic mode, so we are unable to appreciate the logarithmically linear growth of BTC in this chart.

Interestingly, as the bands based on moving averages become smoother with lengthening history of Bitcoin, we see a highly evident convergence between the BTC Power Law bands and the slope derived from moving averages. This highlights an increasing consistency between both models that strengthens confidence in the BTC Power Law slope as a predictor.

Traders can leverage this information to identify significant levels in market expansion and contraction. At the time of writing, we appear to be breaching the central line of each slope. My prediction is that we move up a full two lines, but at least one, during the continuation of the current bull market.