Bitcoin Long Term Power Law Explained
This chart is derived by taking two bands of bitcoin prices.
- A resistance price above the current price
- A support price below the current price
These resistance and support bands were derived by taking a linear regression of the historical bitcoin price to derive a “power law”. This power law is just a straight line to represent the correlation between bitcoin’s price and time. This line is then perfectly copied (including its slope) twice. With these two new lines,
- One is lowered such that the historical bitcoin price is always equal to or greater than the prices hitting that line - the support line.
- One is raised such that the historical bitcoin price is always equal to or less than the prices hitting that line - the resistance line.