Power-Law Model

What is "Power-Law Model"?

Power-Law Model is a mathematical model describing the long-term historical relationship between the Bitcoin price and the time since its inception. The model assumes price dynamics can be approximated by a power function of the number of days since network launch.

Why is "Power-Law Model" important?

The model enables quantitative description of Bitcoin’s historical growth trajectory and assessment of how far the current price deviates from the long-term power-law trend. In retrospective fitting, the model shows a high level of correlation between time and price.

At the same time, its use for forecasting is limited because it is based solely on historical data and does not account for the stochastic nature of financial markets.

How is "Power-Law Model" calculated?

The model is constructed by fitting a power function to historical Bitcoin price data as a function of time. Time is represented as the number of days since network launch, and model parameters are determined empirically based on the selected historical data range.