Bitcoin
Using Power Laws to Predict When Bitcoin Price Will Reach $1 Million
The following is a guest post by Rajagopal Menon, Vice President at WazirX.
Come the bull market, come the models to predict the price of Bitcoin. In the last bull market of 2021, the Stock-to-Flow (S2F) model was the rage of the season. This model, created by Plan B, assessed the scarcity of assets by comparing stock with annual production. Applied to Bitcoin, the S2F model emphasized its “digital gold” potential and provided scarcity-based long-term price predictions. However, the S2F model disappeared in the crypto winter of 2022.
But fear not, in the current bull run, there is a new model in town – the Power Law Model, which claims to predict the price of Bitcoin with remarkable accuracy.
Understanding Power Laws
In a world seemingly full of chaos and randomness, scientists have discovered hidden patterns and relationships known as laws of power. These laws provide a framework for understanding how different phenomena interact, revealing consistent mathematical patterns that govern various aspects of our universe.
Laws of Power in Everyday Life
Power laws are fascinating mathematical relationships that appear in various phenomena, offering insights into the underlying simplicity of complex systems. They describe how two quantities relate to each other, with a change in one quantity leading to a proportional change in the other. This relationship spans different scales, from the microcosmic to the cosmic, influencing biology, society, technology and natural phenomena.
Animal size limits
Galileo’s square cube law is a classic example of a power law in nature, explaining how an animal’s size affects its strength. As animals grow, their bulk and weight increase much faster than their strength. This law establishes natural limits, explaining why larger animals have thicker bones and why larger animals are found in aquatic environments where buoyancy compensates for weight.
Metabolic rates
Max Kleber’s research on metabolic rates further demonstrates the applicability of power laws. It reveals that an organism’s metabolic rate increases to ¾ the power of its mass, indicating that larger animals are more energy efficient. This principle has a significant impact on understanding the life cycles, growth rates and sustainability of species.
Natural Phenomena and Human Activities
Power laws govern diverse phenomena, from the distribution of earthquake magnitudes to the frequency of words in a language. They explain why we observe a small number of significant events alongside numerous smaller cases. For example, Zipf’s law describes the frequency of words in languages, highlighting the disproportionate occurrence of common words compared to less frequent ones.
Beyond natural phenomena
Power laws extend to human activities such as economics, finance and technology. They elucidate the distribution of wealth, where some individuals own a significant portion of the wealth. In technology, power laws describe how content interacts on the Internet, with some highly popular and many less popular nodes forming a long-tail distribution.
Bitcoin Power Law
Astrophysicist Giovanni Santasi discovered this connection. He says 15 years of data shows that Bitcoin also follows a power law principle. Santostasi first shared the power law model on the r/Bitcoin subreddit in 2018. However, it witnessed a resurgence in January after financial YouTuber Andrei Jeikh mentioned it to his 2.3 million subscribers in a video.
Giovanni’s theory says that the price of Bitcoin is not as random as it seems. There is randomness in this, but in the long run, the price of Bitcoin follows a specific mathematical model. It’s not just a mathematical formula that some guy drew a line at; instead, it follows a power law like those observed throughout the universe.
The yellow line represents the current price and the red line represents the support line, Bitcoin’s level usually never drops below. The green line is the linear regression line, which is like the fair value price where Bitcoin will eventually return, and the purple line is the resistance line where Bitcoin typically tops out.
Predicting the future of Bitcoin
Santostasi’s Power Law Model charts Bitcoin’s price trajectory with remarkable accuracy. It features a chart showing the current price of Bitcoin, a support line indicating the level that Bitcoin typically does not fall below, a linear regression line representing a fair value price, and a resistance line marking the level that Bitcoin typically does not fall below. reaches before a recession.
This model highlights Bitcoin’s remarkably linear growth, particularly evident when outliers are removed. Despite occasional fluctuations, Bitcoin’s overall trajectory follows a discernible pattern reminiscent of other phenomena governed by power laws.
Implications for investors
The Power Law Model offers intriguing insights into Bitcoin’s potential future spikes. Santostasi’s analysis suggests that Bitcoin could peak at $210,000 in January 2026, followed by a subsequent decline to around $60,000. He goes on to predict that Bitcoin will be worth $1 million by July 2033. While mathematical models provide valuable information, they are not immune to errors and may not take into account unforeseen events that could significantly impact prices.
“All models are broken, but some are useful” means that although models may not be perfect, they can still provide valuable information. Models such as the power law model or the stock-to-flow model for predicting the price of Bitcoin have their flaws and limitations. For example, Crypto Quant’s Julio Marino pointed out problems with the power law model, such as underestimating errors and giving a misleading impression of accuracy.
Interestingly, both the power law and stock-to-flow models have faced similar criticism. Despite their flaws, they have historically made almost the same predictions for the price of Bitcoin. However, over time, they may differ in their predictions.
The question arises: if these models are correct, why bother with traditional investment strategies like the 60/40 portfolio? Some argue that new models that explain Bitcoin’s behavior could offer better returns.
While some may think these models are useless, others, like the speaker, believe they still have value. Scarcity, driven by Bitcoin’s fixed supply, plays a role in its price appreciation. Furthermore, factors such as M2 growth also influence the price of Bitcoin.
Although models can provide useful information, they cannot predict the future. Even if the models are flawed, Bitcoin’s trajectory appears upward. Therefore, although it is essential to consider these models, it is also essential to recognize their limitations.
Bitcoin
RIOT, MARA and CLSK shares at risk
Bitcoin (BTC) Mining stocks like Riot Platforms (RIOT), Marathon Digital (MARA) and CleanSpark (CLSK) retreated in pre-market trading as BTC retreated.
RIOT, MARA and CLSK all fell more than 2%, while other crypto-related stocks such as MicroStrategy (MSTR) and Coinbase (COIN) fell 1.5%.
Bitcoin sell-off continues
Crypto-linked stocks retreated as Bitcoin resumed its downtrend on Wednesday. After rising to $63,750 on Monday, BTC is hovering at $60,0000 and it is unclear whether it will recover.
More importantly, Bitcoin is dangerously close to the crucial support at $58,273, which is the 200-day Exponential Moving Average (EMA). The next support level for Bitcoin is $56,426, representing its lowest level in May.
Bitcoin Price Chart
If Bitcoin drops below this price, it will be a sign that the bears have prevailed, which could take it to the $50,000 level, if not below.
This decline happened after a whale deposited nearly 2,000 Bitcoins to Binance in two separate transactions. While this isn’t always the case, deposits to exchanges often happen when holders are exiting their positions.
The whales’ action coincided with a period in which the German government continues to sell off its Bitcoin holdings. It transferred $52 million worth of coins to exchanges on Tuesday.
As a result, data from CoinGlass shows that the volume of Bitcoin balances on exchanges has started to increase. The volume rose to 2.49 million on Tuesday, from last month’s low of 2.47 million.
Bitcoin balances on exchanges
Bitcoin Mining Companies at Risk
If the Bitcoin sell-off continues, it will put Bitcoin mining companies like Marathon, CleanSpark, and Riot Platforms at risk. These companies have tended to have a close correlation with Bitcoin in the past.
This drop is happening a few months after the halving event, reducing the amount of Bitcoins that miners receive.
To compensate for this drop, most of these companies have added their mining equipment. CleanSpark has reached a hash rate of 20 EH/swhich helped her mine 445 coins in June after mining 417 coins the previous month. She did this after purchasing 5 mining sites in Georgia.
Digital Marathon mined 590 coins in June, down 40% from the same month in 2023 and flat from May.
Riot Platforms, on the other hand, focused on acquiring Bitfarms, a company that mined 189 coins in June.
Bitcoin
Michael Saylor Issues Statement on Bitcoin Amid Crypto Market Sell-Off by U.Today
U.Today – Amid an ongoing sell-off in the cryptocurrency market, Michael Saylor, a prominent advocate and president of MicroStrategy, made a statement on X (Twitter) that reverberated across the crypto space: “Just Bitcoin.”
This two-word tweet comes as the cryptocurrency market faces significant sell-offs as the price of Bitcoin plummets.
Bitcoin, the largest cryptocurrency by market value, began its decline in Tuesday’s trading session, hitting $63,223 at one point before falling further.
Losses deepened on Wednesday as investors considered remarks from Fed Chair Jerome Powell, with Bitcoin hitting intraday lows of $59,509. At the time of writing, BTC is down 2.85% over the past 24 hours to $60,274.
According to data from CoinGlass, the sell-off has resulted in a significant amount of cryptocurrencies being liquidated in the past 24 hours, totaling over $166 million. However, this has not deterred Saylor’s confidence in Bitcoin, as he reiterates his longing for the crypto asset in his tweet.
Cryptocurrency market crashes
Cryptocurrencies fell on Tuesday after Fed Chairman Jerome Powell said the central bank needs to see more progress on inflation before cutting interest rates, which are now at 5.25%-5.50%. Powell revealed at a monetary symposium in Sintra, Portugal, that the United States is moving closer to a disinflationary path.
“We want to be more confident that inflation is moving sustainably downward toward 2% before we begin the process of tapering or easing policy,” Powell said.
Market losses deepened after Wednesday’s economic releases that indicated the labor market is cooling. Recent data showed weaker-than-expected private payroll growth in June, but weekly jobless claims were higher than economists had forecast. The latest figures come ahead of the highly anticipated June nonfarm payrolls report on Friday.
As the cryptocurrency market goes through a period of uncertainty, the coming days and weeks will be crucial in determining the direction of BTC’s price.
Bitcoin
Bitcoin and Ethereum in GTA 6? Still rumors — for now
Rumors that the long-awaited Grand Theft Auto 6 will use cryptocurrency that has been circulating for more than a year now—and they’re spinning again.
On Wednesday, a pseudonymous Crypto Twitter influencer named Gordon — apparently named after Gordon Gekko from the iconic 1987 film “Wall Street” —shared to his nearly 500,000 followers that “GTA 6 will allow cryptocurrency payments” and that “so far only Bitcoin, EthereumIt is USDT [are] confirmed.”
But in reality, no cryptocurrency has been confirmed for Grand Theft Auto 6, despite ongoing chatter about the rumors. Rockstar Games and parent company Take-Two have made no such announcements this week on the subject, nor have they made any prior announcements, and official trailers and announcements have made no mention of cryptocurrency being included.
However, the tweet — which also included a fake trailer for the game — quickly went viral, with over 500,000 views as of this writing in a matter of hours. When Twitter users asked Gordon for his sources, he would jokingly respond that his “uncle works there” or say that previous reports on the matter were “old” at this point.
But really, nothing has changed since then. DecipherGG’s reported in previous rumors in May 2023, not even since the first official trailer — which initially leaked with “BUY BTC” stamped on itApparently by the leaker in question—premiered last December.
DecipherGG reached out to Rockstar Games for comment but did not receive an immediate response.
Could Grand Theft Auto 6 implement a crypto element when it releases in 2025? It’s certainly possible, and if so, it would be a transformative moment for cryptocurrency adoption by the traditional gaming industry.
Take-Two Interactive has explored the space before, acquiring casual gaming giant Zynga in early 2022, when Take-Two founder and CEO Strauss Zelnick suggested there were “Web3 opportunities” that they could explore better as a team. Zynga has launched its first blockchain game on Ethereum, called Sugartownbut Take-Two has yet to get involved with other brands.
Rockstar Games, on the other hand, prohibited the use of cryptocurrency or NFTs on player-run Grand Theft Auto 5 servers in late 2022, following a rise in the use of NFTs to represent unique player-owned assets on modded game servers.
And given Grand Theft Auto’s satirical tone, the game may be more likely to criticize cryptocurrency and poke fun at caricatures of crypto fans and NFTs, for example, rather than trying to launch its own on-chain currency. But that’s all speculation at this point, as there are relatively few official details about GTA 6.
For now, at least, don’t believe the hype. While Rockstar Games hasn’t officially closed the door on cryptocurrency usage in Grand Theft Auto 6, it hasn’t confirmed anything about it either. However, it’s sure to remain a hot topic in the long run leading up to release, which is currently scheduled for fall 2025.
Edited by Ryan Ozawa.
Bitcoin
Crypto President Trump’s ‘Lesser’ Regulation Will Bless Coinbase’s Bitcoin Leverage, Expert Says – Coinbase Glb (NASDAQ:COIN)
Chris SenyekChief Investment Strategist at Wolfe Researchrecently expressed his opinion on the potential impact of a Donald Trump win the 2024 elections in the cryptocurrency market.
What happened: Senyek suggested that a Trump presidency could ease cryptocurrency regulations, benefiting companies like Coinbase Global Inc. COIN due to its importance Bitcoin BTC/USD Leverage.
“Trump would be less harsh on crypto regulation, and Coinbase would be a big beneficiary of that given its influence on bitcoin,” Senyek said during CNBC’s “Last Call” on Tuesday.
See too: Enhance Your Retirement Portfolio: The Benefits of Adding Cryptocurrency
Why does this matter?:Senyek’s comments come in the context of the former president Donald Trump‘s reported plans to participate at the Bitcoin 2024 convention, which could reinforce his image as a “Crypto President”.
Trump’s potential participation in the Bitcoin 2024 convention, a major event on the cryptocurrency calendar, could have significant implications for the industry.
Pratik KalaHead of Research in DigitalX Limitedhe has predicted a Trump victory in the upcoming elections, but warns that immediate cryptocurrency-friendly regulations may not be a priority.
A recent report by 10x Search explore the recent rise in Bitcoin price and its potential connection to Trump’s strong position in the 2024 election race. The report, titled “Is the Bitcoin Trump Pump Sustainable?”, highlights a 4% spike in Bitcoin’s price following the news that the president Joe Biden will remain in the race despite a poor performance in the presidential debate.
Price Action: At the time of writing, Bitcoin was trading 2.10% lower at $60,860.66, according to Benzinga Pro.
Read next:
Image created using photos from Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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