Bitcoin Reaches Historical Low, Potential for Rebound Ahead
Bitcoin hits Power Law level low that historically precedes a rebound
Image: Coindesk
Bitcoin has dropped below $66,000, entering a historically significant low within the Power Law corridor, which has often preceded market rebounds. The Power Law Oscillator indicates Bitcoin is currently cheaper than 95.6% of its historical prices, suggesting a potential for recovery similar to past market stress events.
- 01Bitcoin's price has fallen to the lower boundary of the Power Law corridor, a model that has tracked its price for over a decade.
- 02The Power Law Oscillator currently stands at 4.4%, indicating Bitcoin's price is lower than 95.6% of its historical readings.
- 03Historically, Bitcoin's price at this level has coincided with significant market stress events, such as the March 2020 crash and the FTX collapse.
- 04The model suggests that Bitcoin's growth naturally slows as the network matures, differing from traditional models based on new Bitcoin creation.
- 05Long-term investors view the current price as a deep historical discount, although the Power Law does not guarantee a rebound.
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Bitcoin's recent decline below $66,000 has brought it to a critical low within the Power Law corridor, a valuation model that has effectively tracked Bitcoin's price movements for over a decade. Currently, the Power Law Oscillator is at 4.4%, suggesting Bitcoin is priced lower than 95.6% of its historical averages. This level has historically preceded rebounds following significant market downturns, such as the March 2020 pandemic-induced selloff and the November 2022 collapse of the FTX exchange. The Power Law model, refined by Porkopolis Economics and based on principles from physicist Giovanni Santostasi, posits that Bitcoin's growth rate slows over time as the network matures, contrasting with traditional models focused on Bitcoin creation rates. While the current price level signals a potential opportunity for long-term investors, the Power Law does not guarantee that the floor will hold this time around.
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