Long Term Power Law
Bitcoin’s natural long-term power-law corridor of growth.
Data & charts updated every 5 minutes - Get 10 seconds
This chart shows the Bitcoin price, and four different price models that attempt to project Bitcoin's price:
- Stock to flow
- Stock to income
- Power Law
- HPR Rainbow
The Bitcoin power law was created by Giovanni Santostasi
(@Giovann35084111 on Twitter) in 2015.
Giovanno is a physicist, neuroscientist, and financial analyst.
You can read his recent overview of how he created the model
here.
The power law aims to project the price of Bitcoin based on the following assumption:
Bitcoin's price, users, and mining power increase in a predictable way, like a city growing, where each part influences the others in a continuous feedback loop.
Stock to flow was created by PlanB in 2019.
Stock to flow is a model used to determine the scarcity of assets. The model can also be used to predict prices of assets based on scarcity.
Formula:
The formula for stock to flow is simple.
Stock to flow equals: Stock / Flow
Stock is the current amount of an asset.
Flow is the amount of an asset produced in a given year.
Let's say there are 20 million bitcoins, and 200,000 new bitcoins are issued each year.
Our equation would be:
20,000,000 total BTC / 200,000 new BTC per year = 100 stock to flow (S2F)
Based on this S2F value, a model is created to attempt to project the Bitcoin price based on scarcity.
The Bitcoin Stock to Income model is based on the Stock to Flow model, with two major differences:
- Stock to flow does NOT account for transaction fees earned by miners, only new bitcoins. Stock to income includes miner fees in flow.
- Stock to flow only used data until March 2019, which is when it came out. Stock to income is re-generated daily, ensuring an accurate model.
Stock to income aims to paint a more accurate projection of the Bitcoin price, using current data and accounting for miners' transaction fees earned as flow.
Created by @_digitalik_.
The Halving Price Regression (HPR) is a non-linear regression curve calculated using only the Bitcoin prices on the Bitcoin halving dates.
This method excludes the hype cycles to create a conservative price estimate.
Bitcoin’s natural long-term power-law corridor of growth.
Shows the projected Bitcoin price based on version 1 of the stock to flow model.
A Bitcoin rainbow chart using only the halving dates as data.