Bitcoin Price: Using Logarithmic Growth to Determine Long-Term Trends
Bitcoin’s value has been on the decline for the past year, with the market still recovering from a 78% drop and leaving many investors wondering what the future holds. However, by looking at the bigger picture and using a logarithmic growth curve, we can see that Bitcoin is still on track for long-term success.
Assets are measured in growth of price and time, with growth being either exponential or logarithmic. Bitcoin growth is logarithmic, meaning that it starts fast and then slowly decreases over time. Despite slowing down, it never stops.
This chart from TradingView shows how Bitcoin’s value has grown rapidly in the beginning and how it is currently experiencing less and less growth over time. However, using the logarithmic growth curve as a median, we can use it as a mean reversion tool, making it possible to buy below the mean and sell above it. This strategy has historically been successful, as buying low and selling high is a sound investment strategy.
Bitcoin’s trajectory follows the long-term growth of Bitcoin overall, with huge volatility in between. However, as growth slows over time, so does volatility. This explains why the top crypto asset bottomed out after only a 78% drawdown as opposed to 84% and higher in the past. Using the logarithmic growth curve as a median can be used to effectively predict when to enter and exit the market.
It is important to note that dramatic new lows could mean the end of logarithmic growth in Bitcoin, which is why this chart is so reassuring. While Bitcoin’s value may be on the ropes right now, it still shows strong long-term potential.
About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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