After briefly falling below $66,000 on Wednesday, bitcoin is trading near the bottom of the Power Law corridor, a level that historically occurs shortly before the price of the largest cryptocurrency rebounds.
The model, popularized by physicist Giovanni Santostasi and refined by Porkopolis Economics, plots bitcoin’s price as a function of time on a logarithmic scale and suggests that growth naturally slows as the network matures. He has been tracking the price trajectory of Bitcoin for over a decade.
Unlike traditional cyclical models that focus on the rate at which new bitcoin is created – it is reduced by 50% approximately every four years – the Power Law holds that bitcoin follows a long-term mathematical trend similar to patterns seen in nature, where growth decelerates over time.
According to checkonchain data, the Power Law Oscillator shows that, measured against the model, bitcoin has been more expensive than it is today for approximately 95.6% of its trading history.
Previous visits to these levels have coincided with periods of extreme market stress, including the pandemic-driven sell-off in March 2020 and the collapse of crypto exchange FTX in November 2022. Both events pushed Bitcoin toward the lower edge of the pattern before significant recoveries followed.
While the Energy Act offers no guarantee that the bottom will hold again, long-term investors view the current reading as a sign that bitcoin is trading near one of its largest historical drawdowns from the trend.
