Article Source:
Here is a summary of the key points:
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Significant Deviation: Bitcoin (trading below $90,000) is currently at a steep discount to the model's projected value of approximately $118,000. This 32% deviation is the largest gap since the "yen carry trade unwind" in August 2024.
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Change in Behavior: Unlike previous market cycles where Bitcoin typically overshot the model during bull runs and fell below it during bear markets, price action in the current cycle has largely tracked very close to the model's trajectory until now.
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Comparison to Other Models: The article notes that long-term valuation models often break eventually. For instance, the once-popular Stock-to-Flow model (created by PlanB) has been considered invalid since January 2021; it currently predicts a price of roughly $1.3 million, which is far disconnected from reality.
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The Critical Question: The Power Law Model is backward-looking and offers no guarantee of future accuracy. The market is now at a decision point: either Bitcoin will "mean revert" back up toward the $118,000 trend line, or it will break lower, potentially marking the end of the Power Law Model's reliability.