What do we know about BTC with high probability?

we go over the state of the power law / chain analysis for last 15 years

The Big Picture
What we know with high probability about Bitcoin

I want to summarize the key points of the work of Giovani, StephenPerrenod, APSK32, PlanC, myself and others as to what we know about Bitcoin. The point is to be as clear and concise as possible.

1. Every day, new people adopt Bitcoin as a savings technology.

We can measure this as the number of Bitcoin addresses with a cutoff amount of Bitcoin. This number grows as a very consistent power law of time. The higher the cutoff rate, the lower the power. For a cutoff rate of $100 in Bitcoin or so, the power is around 3. For 0.1 BTC, the power is 2. For a whole Bitcoin, the power is 1.4. The main point is the data is very clear: adoption rate is growing consistently in good markets and bad. The Correlation (0.987) is amazing.

2. The havings have been a key growth driver but no longer have massive impact

By January 2013, half the Bitcoin supply was mined. The supply schedule parameters set by Satoshi were “educated guesses” as to what would be needed to jump start the network. As of today 94% of the coins have been mined, and the total mining per year is under 1%. The point here is that scarcity is not what drives Bitcoin growth. The original idea of Plan B is incorrect.

3. The data is cyclical

There is clear cyclicality in the data. Bull markets go for 3 years, with a 1 year bear market. This is what we have seen so far. 2024 is  year 2 of the cycle. This tends to be a very good year, with year 3 being the best.

4. Bitcoin is used for large transfers

People transfer bitcoin infrequently and in large dollar amounts ($1,000-$5,000). This is a wire settlement layer not VISA at this point. Eventually layer 2 technologies including lightning and legal changes such as ability to not report taxes on small transactions could make Bitcoin used for general transfers

5. Price grows like the power law of time.

With the supply very close to fixed, and adoption growing as the cube of time, the price is growing as the 5.8th power of time, with 0.25 volatility in log space. This is remarkably consistent from a statistical point of view, with very high correlation and stable parameters. A good real time model for this is BitBo

6. Price tends to be move volatile on the upside than the downside

Bitcoin tends to never go beyond one standard deviation below trendline, but spikes up to 2 standard deviations on the upside (example 2017, 2020). There are many ways to look at this, but it’s clear the data is somewhat asymmetric and favors bull market explosions.