Is Bitcoin About to Break Its Last Surviving Valuation Model?
Bitcoin's price is significantly below the power law model, raising questions about mean reversion or the model's invalidation.Summary
Historically, every long-term Bitcoin valuation model has eventually been broken, but the power law model has been the most resilient this cycle, showing price tracking close to its trajectory.
The power law framework mathematically describes Bitcoin's long-term price trends based on a log-scale distribution relating time and price, though it is a backward-looking model. Currently, the spot price is trading around $90,000, which is a steep 32% discount to the model's value near $118,000—the largest deviation since August 2024.
The key uncertainty is whether Bitcoin will mean revert back toward the power law trend or break lower, potentially invalidating this cornerstone model, similar to how the Stock to Flow model became invalid in early 2021.
(Source：CoinDesk)