How long will the Bitcoin Power Law framework remain reliable?

Bitcoin Diverges from Power Law: Mean Reversion or Another Broken Model?

As the gap between bitcoin’s spot price and the Power Law model widens, investors are asking whether a return to the trend is coming—or if the model itself is losing relevance.

Historically, long-term bitcoin valuation models eventually fail, but the Power Law has remained one of the most robust this cycle. In prior cycles, bitcoin often overshot the model in bull markets and fell below it in bear markets. In the current cycle, however, prices have largely tracked the model’s trajectory.

The Power Law framework provides a mathematical view of long-term trends, showing bitcoin’s historical performance follows a power law distribution on a logarithmic scale. While it offers insight into structural trends, it is backward-looking and does not guarantee future predictive accuracy.

At present, bitcoin trades below $90,000—about 32% beneath the Power Law value of $118,000, marking the largest deviation since the August 2024 yen carry trade unwind, which produced a 35% gap and took three months to recover.

In contrast, models like the Stock-to-Flow framework by PlanB have long been invalid, projecting unrealistic prices above $1 million per bitcoin today.

The key question for investors: will bitcoin revert to the Power Law trend, or could it break lower, challenging yet another major valuation model? Market watchers are closely monitoring the outcome.