The bear market of 2022 has been brutal as over $2 trillion in value has been wiped from the crypto economy. In addition to the record value lost, the crypto winter managed to break many popular bitcoin pricing models like the Rainbow price chart and Plan B’s infamous equity-flow model. Additionally, since May 11, 2022, the well-known power-law corridor model or logarithmic growth curve chart has also been broken, deviating below the lower band for approximately 86 days.
A Deviation From the Norm: 2022’s Bitcoin Bear Market Breaks Some of the Most Popular Price Models
For years, crypto traders have utilized tools, charts, and models to predict the future value of Bitcoin (BTC) and other popular digital assets. Bitcoin.com News has written many times about Plan B’s stock to flow (S2F) pricing model, and in 2021 the S2F model was quite accurate until the end of November.
In addition, many bitcoiners rely on other charts and pricing models such as the Golden Ratio multiplier, Fibonacci sequence, Rainbow model, logarithmic growth curve, etc. In the last quarter of 2021, bitcoin traders expectedBTCwould reach $100K per coin by the end of the year.
September 2021, whenBTCwas swapped at a price between $45K and $50K, Will Clemente, Lead Insight Analyst at Blockware Solutions, said he was “Illiquid Supply tweeted about a new pricing model he called the “Floor. At the time, Clemente said the model combined Glassnode’s illiquid supply data with Plan B’s S2F model to create a floor price for bitcoin based onthe real-time scarcity of BTCHe stated.
Clemente’s predicted floor value was $39K, and over time, the analyst’s Illiquid Supply Floor model broke down; even after Plan B’s S2F “worst-case scenario” forecast deviated at the end of November, the pseudonymous analyst said the bitcoin price was “100K He stated that he is confident that it is “on track toward the dollar.
None of these bold predictions came to pass, and amid the beginnings of a crypto bear market, this type of pricing model was openly ridiculedand condemnedby many in the crypto community. The illiquid supply floor was not solid, S2F was broken, and people ridiculed the popularprice indicator.” “Rainbow” price indicator
I made a new improved model of the Rainbow chart pic.twitter.com/zgjbqQtOb1
– levelsdennis. Lens (@levelsdennis) June 19, 2022
The popular Powerlaw Corridor model has recorded 86 consecutive days off the norm
Additionally, one of the most popular bitcoin price models, the power-law corridor model (logarithmic growth curve chart), has also been broken since May 11, 2022. This chart is preferredbecause the timeline of the BTCprice can be viewed from alogarithmic perspective. In fact, thelogarithmic price chartis one of the most popular in the world of crypto and traditional financial technical analysis.
Bitcoin logarithmic growth curve charts are hosted on crypto web portals such aslookintobitcoin.comandcoinglass.com. The current deviation is anomalous asthe price of BTChas only fallen below the lower band twice in its pre-2022 history. The first deviation occurred quickly in October 2010 and the second significant deviation occurred on March 11, 2020.
March 11, 2020, aka “Black Thursday,” was an interesting day for every asset on the planet as financial markets shook across the board. At that time,BTCbroke below the $4K range and its movement sank below the low-debrine of the logarithmic growth curve chart.
This particular outbreak did not last very long, as global markets rebounded from the initial Covid-19 scare and a bull market occurred almost immediately after. The price of bitcoin soared into the $64K zone in April 2021 and then beyond that range to $69K on November 10, 2021.
Nine months later, Bitcoin’s (BTC) price is 66% below its all-time high of $69K, breaking the popular and often reliable log growth curve model for 86 consecutive days. Meanwhile,BTCsaw its first bear market rally, but price is still a ways away from returning to the lower band of the power corridor.
To do so now would require prices to be just above the $35K level. Bitcoin prices have never been below the low band line this long, which is unusual when looking atthe 13-year price cycle for BTC. This break shows that markets often follow certain mathematical laws, patterns, and models, but this type of technical technique is not always true.
Currently, the latest bear market rally and other factors indicate that a bottom is very likely in this particular crypto winter, but as charts and signals like these have broken in the past, it means that no one can really guarantee that there is a bottom in the crypto market
Image credits: Shutterstock, Pixabay, Wiki Commons, lookintobitcoin.com, Twitter, bitcoinwisdom.io, .