Bitcoin On a Logarithmic Scale – Why it Fits Perfectly!
Bitcoin is a new asset class that draws similarities with no other markets. Moreover, extreme volatility, speculation, and fear around Bitcoin have always kept the investors under FOMO or FUD. Interestingly enough, the fear of it shooting to the moon overnight is also a prominent driving force among investors.
Over the decade three prominent price actions have been observed on Bitcoin; in 2011, 2014 and 2017. Each bigger than the previous one.
In 2016-2017, the rise of Bitcoin was so ardent that bears seemed long gone. It seemed like the price would not rest until the system is ubiquitous. However, the downfall of 2018 reaffirmed the fact that cryptocurrency still has a long way to go before mass adoption.
However, on a linear range, all that be seen is noise. It weakly follows a consecutive bull and bear cycle. However, the correlation between the cycles has been limited.
Moreover, the price on a linear scale does not accurately quantify the rate of growth in Bitcoin as well.
On a logarithmic chart, the percentage increase is more significant than the growth in value. This is important as a $500 rise/fall might not affect the traders, but two years from now, it would have created tremendous euphoria.
The logarithmic scale for Bitcoin shows that Bitcoin has indeed experienced exponential growth in the last four years. The increase was further accentuated during the bull cycles of 2016-17. While it seems to be bound by the trendline again, the inclination is positive.
We can also see that the price surge in 2019 also met resistance from the trendline and now seems to be oscillating between the two. The last time it broke below the support line was in October 2018.
Bitcoin has witnessed three parabolic moves until now: in 2013-14, 2016-17 and the most recent and short phased in 2019. A break and retest of the trend line should signal the next bullish move of astronomic proportions like in 2017.