Traders use a variety of tools, charts, and models to help them predict the Bitcoin price cycle. Our last article discussed using the golden ratio multiplier. The following editorial discusses another method of using a logarithmic growth curve for Bitcoin price prediction analysis. In September 2019, a comprehensive paper published by Harold Christopher Burger described how crypto proponents use the power-law corridor model to visualize bitcoin price cycles.
Bitcoin’s logarithmic growth curve
In order to give our readers a deeper understanding, Bitcoin.com News reported on some useful price models, which can be used by technical analysts and cryptocurrency traders to predict the future price of Bitcoin.
Previous reports discussed the golden ratio multiplier and how Bitcoin uses the well-known golden ratio and Fibonacci sequence to predict future value. The next topic is how crypto enthusiasts can use the logarithmic growth curve to understand the Bitcoin (BTC) price cycle perspective.
In essence, logarithmic growth is the reciprocal of exponential expansion, and it is much slower than rapid and aggressive growth. Logarithmic growth is used in biology and various sciences, but exponential and logarithmic functions can also be used in finance.
You can see the Bitcoin price schedule from a logarithmic perspective. In fact, the logarithmic price chart is one of the most popular charts in the field of cryptocurrency and traditional financial technical analysis. To put it simply, the log chart of encrypted assets uses the traditional percentage ratio, and all the intervals are equivalent to the ratio.
Even with the most basic logarithmic BTC chart, individuals can get a completely different appearance from typical encrypted price charts using candlesticks and different time frames. In addition, Bitcoin traders can view the logarithmic growth curve model of the encrypted asset, which provides more perspective.
The specific logarithmic growth curve (LGC) price model hosted on lookintobitcoin.com was created by Corgana with @quantadelic. The website noted that the price model was also “inspired by the work of Harold Christopher Burger.”
Harold Christopher Berg He published a comprehensive study on LGC in his paper “Bitcoin’s Natural Long-Term Power Law Growth Channel”. When Burger wrote this paper in 2019, he mentioned some people, such as John McAfee ($1 million) and Nouriel Roubini ($0), who made outlandish price predictions.
Burger looked at the complete price history of Bitcoin (BTC) from a logarithmic perspective in his editorial. Essentially, Burger uses a power law or power law corridor (PLC) model to describe the possible future price patterns of BTC.
Burger said at the time that he was “very confident in the long-term that prices will indeed develop as stated in his article.” His research pointed out that Bitcoin follows a price corridor that can be divided into two bands.
The analyst’s paper details: “One is at the lower end of the price forecast and is quite thin, and the other is at the larger price forecast, and at the higher forecast.” “The price of Bitcoin is on two bands. It takes equal time. This means that big bubbles and bubbles may continue to exist.”
Researchers on the Quantodian Publications blog explain that price models can help people determine market entry and exit points. The blog post emphasized: “This model allows us to make broad predictions of the long-term future price of Bitcoin.”
- “The price will reach $100,000 per bitcoin no later than 2021 and no later than 2028. After 2028, the price will never be less than $100,000.”
- “The price will reach $1 million per bitcoin no earlier than 2028 and no later than 2037. After 2037, the price will never fall below $10 million.”
Constant movement: normal and bull mode
After doing some mathematics, equations, and linear regression, Burger found that the basic support level for BTC prices follows a power law. He performed a linear regression of Bitcoin’s peak price in 2011, 2013 and 2017.
Berg said: “The top of the market also seems to follow the power law.” “If the next market top also follows the power law, the top of the market will be on this line. The slope of the power law is 5.02927337, and for all data The combination gives us a larger slope at 5.845509376. This shows that the Bitcoin bull market is relatively mild compared to the overall trend line,” the author added.
When Burger quantified these measurements defined by the three Bitcoin market price highs and the coefficient of determination, the researchers proposed two power laws. He also uses random sample consensus or RANSAC to get more data points.
The researchers then found two modes, a normal mode and a long mode, and were further able to formulate different power law models for the price of BTC. Burger shows a chart that includes “power law fit”, “power law fit minus bias”, “power law fit with only three tops”, and “robust fit”.
“We now have various models to predict the future price of Bitcoin. All we have to do is expand the chart,” the Burger blog post pointed out. The researcher added:
We can further divide this corridor into two bands, one corresponding to the “normal” mode and one corresponding to the “bull market” mode. So far, the price has been in the lower “normal mode” band for half of the time, and in the higher “bull mode” band for the rest of the time.
“Black Thursday” and the current situation
Since its release, the Power Law Growth blog post written by Burger has followed Bitcoin’s price trend very well. The author of Quantodian Publications did point out that when he established a support line for the price of Bitcoin to follow the power law, there was a case in 2010 when the price of BTC fell below the line.
Since the blog post was published on September 4, 2019, there has been a second time that the price of Bitcoin has broken through the “robust fit” line.
This specific time was during the financial crisis on March 12, 2020, also known as “Black Thursday”, when BTC and almost all assets in the world experienced a decline in value. Due to the fear and shock that Covid-19 brought to the financial market, March 12 was considered an abnormal event, and possibly an abnormal event.
Finally, the current chart shows that Bitcoin has recently gone through a bullish cycle, but it has not peaked like other bull market cycles. In fact, the chart shows that the northbound price high has stabilized at a level much lower than the other peaks, and the price has begun to move southward.
What do you think about logarithmic graphs, power laws, and the use of logarithmic growth curves to predict Bitcoin price cycles? Let us know your thoughts on this topic in the comments section below.
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