Deep Dive
The Bitcoin power law
The power-law framing is the mathematical backbone of the BFV model. It is not magic. It is a compact way of describing a long-run relationship between Bitcoin price and time.
Alpha
5.82
Beta
-17.31
R²
0.92
Data Points
365
What a power law is
A power law describes a relationship where one variable changes as a power of another. In Bitcoin’s case, the claim is that price has historically followed a long-run path that looks roughly linear when plotted on log-log axes.
Why people use it for Bitcoin
Bitcoin has had wild cyclical volatility, but its long-run growth path has still shown surprising regularity. The power-law model is one attempt to compress that pattern into a simple valuation framework.
Why BFV uses it carefully
The point is not to claim precision. The point is to create a practical reference line. If price gets far above that line, risk is usually higher. If price gets far below it, long-term opportunity has often improved.
What this means in practice
The power law is best used as a sanity check. It is most helpful when sentiment is extreme, because that is when humans are worst at judging valuation without a framework.