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On a significant day for Bitcoin, which commenced at $56,900, the leading digital currency has officially moved out of the bear market as per the Bitcoin Power Law model. After exceeding $61,000, it has now attained the ‘fair price’ of $61,594, consistent with the anticipated power law price.
Power law model for Bitcoin’s price (Source: Bitcoin fair price)
Initially proposed by Giovanni Santostasi, the Bitcoin Power Law is a framework that seeks to forecast Bitcoin’s long-term price path based on its historical inclination to follow a nearly straight line when represented on a logarithmic scale. This trend implies an inherent pattern to Bitcoin’s expansion.
The model differentiates between “fair price” (the trend line that signifies an average valuation) and “bottom price” (historically around 58% lower than the fair price, suggesting a possible floor). These figures are derived using a formula that incorporates the number of days since Bitcoin’s inception (Genesis Block) and a particular exponent:
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Fair Price = 1.0117e-17*(days since Genesis Block)^5.82.
The chart below illustrates a segment of the power law model and its corresponding fair price as presented by Santostasi on Feb. 25. Bitcoin has since surpassed the current ‘fair price,’ indicating it is progressing towards the bull market ‘bubble’ recognized as a crucial element of each Bitcoin halving cycle within the power model.
Bitcoin power law chart (@Giovann35084111)
According to the power law model, the price fluctuates from the ‘fair value’ both above and below during bull and bear markets but ultimately reverts to the fair value over time. Historically, the model has demonstrated a high degree of accuracy. Nonetheless, it is crucial to recognize that this is a model, and while it has performed remarkably well at times, market dynamics can shift, and the model cannot encompass all variables that may affect Bitcoin’s price.
The post At $61,594 Bitcoin is at fair market price according to the power law model appeared first on CryptoSlate.
