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Cryptocurrency News Articles
Bitcoin Long-Term Power Law Could Reveal Possible Location Of Next Top
Sep 25, 2024 at 06:00 pm
An analyst has explained how the next Bitcoin top could be situated around $400,000, if this model for the asset's price continues to hold.
An analyst has shared his thoughts on what the next Bitcoin top might be, using a well-known price model for the asset.
Bitcoin Long-Term Power Law Could Reveal Possible Location Of Next Top
In a recent post on X, analyst Ali Martinez has talked about what the Long-Term Power Law could say about the next potential Bitcoin top. The “Long-Term Power Law” in this case refers to a BTC price model created by Bitbo.
Related Reading: Bitcoin MVRV Ratio Is At A Critical Retest: Can Bulls Triumph?
The model consists of three lines, with the main one being the “power law,” which is derived by performing a linear regression on the historical BTC price. “This power law is simply a straight line to show the correlation between Bitcoin’s price and time,” notes Bitbo in the description of the model.
The other two lines of the model are simply copies of the power law, except for how they’re arranged on the chart. One of these lines is placed below the power law by just enough that the historical BTC price either stays above it or touches it.
This level of the model is called the support line. And the other line sets an upper bound on the crypto’s price and is known as the resistance level.
Now, here is a chart that shows how the Bitcoin Long-Term Power Law has trended throughout the asset’s history:
Bitcoin’s spot price is currently trading below the power law, as can be seen in the chart. The asset retested the line earlier this year when it set its new all-time high (ATH), but it was unable to break through. However, BTC still has some distance above the support line of the model despite the recent bearish price action.
The chart demonstrates that Bitcoin established three of its major tops around the resistance line. However, the 2021 bull run top occurred before the asset could reach the level. As a result, it’s unclear whether the current BTC cycle will follow the lead of the earlier three.
Related Reading: Is Altcoin Season Coming? These Two Signals Could Suggest So
“If the Bitcoin Long-Term Power Law holds, the next market top might hit around $400,000!” notes Martinez, as the resistance level would assume a value around that mark next year.
As for when exactly BTC might hit its next cyclical top, the analyst has also covered it in another X post, sharing the chart below for the asset’s performance during the last couple of cycles:
“If this Bitcoin cycle follows the last two, we could see a market top in about a year, around October 2025!” notes Martinez.
BTC Price
Bitcoin has been moving sideways over the last few days, with its price still hovering around the $63,200 mark.
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