12th February 2024 > > ETFs & power laws.

tl;dr

ETF flows continue to drive BTC’s price higher. Power laws sometimes have predictive characteristics.

Market Snap

Market Wrap

Another decent move for BTC with Asian markets positioned in advance of the likely relentless buying from the ETFs (see below) at the US open. The big five-oh is not so far off now with the annual gain sitting at a rather delightful 120%.

Curious Cryptos’ Commentary – Spot BTC ETF flows

Following on from resident techie Larry’s thesis we discussed two days ago, here is an interesting graphic showing the flows out of GBTC and into the nine new-borns:

On Friday 9th February the new-borns saw net inflows of $541mm, the second highest day whilst GBTC saw its lowest outflow at $52mm.

Long may this trend continue.

Curious Cryptos’ Commentary – Power laws

Wikipedia defines a power law thus:

“In statistics, a power law is a functional relationship between two quantities, where a relative change in one quantity results in a relative change in the other quantity proportional to a power of the change, independent of the initial size of those quantities: one quantity varies as a power of another.”

Power laws crop up all over the place including determining planetary motions around the sun, how the area of a square is related to the length of its side, Pareto’s law, fractals, social economics, city growth, and so on. It isn’t necessarily obvious why nature works this way for some of these examples, though its existence cannot be denied.

Now it seems that the price of BTC is also the subject of a power law. A graph of price and time in log scale looks like this:

If this model is accurate then the end of this year should see a price for BTC of $80k with variation of anywhere between $400k (!) and $30k (boo). That is some predicted volatility which means that using DCA (dollar cost averaging) will always win out, and that anyone using leverage needs to lie down in a dark room and have a quiet word with themselves.