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In an era where bitcoin’s value fluctuates wildly, a price model has emerged, offering a mathematical glimpse into its future price. The “Bitcoin Power Law,” suggests an interesting path for bitcoin’s price, rooted in the principles of algebra and natural laws. The model, representing a blend of science and finance, forecasts bitcoin’s journey to unprecedented heights reaching $1 million per unit by 2033.
The Power Law Model’s Bold $1 and $10 Million per Bitcoin Predictions
The Bitcoin Power Law suggests a predictable trajectory for BTC’s price, mirroring the patterns seen in natural phenomena ruled by power laws. BTC proponents Fred Krueger and Giovanni Santostasi devised a formula, (Estimated Price = A times (days from GB)^n), with GB denoting the Genesis Block and (n) being set at 5.8, to map out BTC’s price journey from its start.
Notably, this model not only accurately reflects bitcoin’s historical price changes but also anticipates a rise to $1 million per coin by 2033, eventually reaching an impressive $10 million by 2045. Krueger, a staunch advocate for BTC, frequently references Hal Finney’s prediction of a $10 million value, aligning it with their price model.
“As an amusing thought experiment, imagine that bitcoin is successful and becomes the dominant payment system in use throughout the world,” Finney said in 2009. “Then the total value of the currency should be equal to the total value of all the wealth in the world. Current estimates of total worldwide household wealth that I have found range from $100 trillion to $300 trillion. With 20 million coins, that gives each coin a value of about $10 million.”
This graph is simply amazing. When you plot Price and Time both in log scale, it’s clear Bitcoin is just on a relentless power law. HT/ @moneyordebt pic.twitter.com/9josXLiyZH
— Fred Krueger (@dotkrueger) February 2, 2024
Power Law Proponents Believe the Model Is Different Than S2F
Critics and supporters alike delve into the model’s implications, debating its feasibility and comparing it to other models like Plan B’s stock-to-flow (S2F) price model. In recent years, the S2F price model has faced skepticism for its lack of reliability. Yet, what proponents believe sets the Power Law apart is its foundational belief in BTC’s growth mirroring that of a city, expanding steadily over time rather than exploding in unpredictable bursts. This perspective aligns with BTC’s essence as a decentralized financial ecosystem, growing in value and influence with each additional user.
Latest monthly update as #Bitcoin approaches one kilo bar of gold. BTC/Au increase a factor of 480 (48000%) times in 11 years. Longer range targets are 100 ounce and 400 ounce bars. pic.twitter.com/EnVPoLVUZG
— moneyordebt ∞/21M (@moneyordebt) March 1, 2024
Despite its optimistic outlook, the Power Law model faces skepticism, with detractors questioning the reliability of predicting financial markets through mathematical models. However, Santostasi’s model, validated by regression analysis, claims a 95.3% accuracy, bolstering its credibility among proponents. By proposing a steady yet substantial growth in bitcoin’s value, with a rate of 5.8, the Power Law model questions mainstream growth beliefs. The confidence in BTC following the Power Law stems from a deep analysis of its historical price movements since its inception.
Power Law proponents argue that similar to phenomena in physics and biology, bitcoin’s growth exhibits a scaling relationship with time, discernible in a log-log plot where both price and time are scaled logarithmically. This relationship suggests a proportional change in bitcoin’s value relative to time, independent of its initial size, echoing the dynamics of complex systems observed in nature. As we move forward, the accuracy of this model and its implications for investors and enthusiasts alike will be closely watched, just like Plan B’s S2F model and rainbow charts.
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