Manage Future Bitcoin Price Expectations & Volatility
Draft
Given that Bitcoin is a form of money with a completely fixed supply, it follows that, over time, all prices denominated in it will decrease. The deflationary nature of Bitcoin as money means that, no matter how much you spend today, in the future, you will realize that if you hadn’t spent that amount, it would have gained purchasing power.
So, in the grand scheme of things, it doesn't really matter how much Bitcoin in nominal terms you own right now or how much you're going to own in the future. What truly matters is the average direction of your purchasing power, which will increase over time, especially relative to when you first adopted the full Bitcoin standard.
Understand also that you can't really avoid spending Bitcoin in real terms. Whenever you make a purchase, you're spending some of your overall purchasing power, and you can always denominate that amount in Bitcoin according to the exchange rate at the time of the purchase. So, if you spend $100 from your fiat balance, you have spent $100 worth of Bitcoin at the time of the purchase.
It doesn't matter if you made your large purchases during the bull market before the price peaked. What matters is that you made those purchases within your budget, maintained an overall positive net income, and received positive inflows from your reconciliation balance adjustments.
Power Law
As of January 16, 2025, the Bitcoin price is $98,693, and the power law trend stands at $86,162.
One year from today, on January 16, 2026, the power law is projected to reach $121,565, which represents a 41% increase.
Two years from now, on January 16, 2027, the projection is $168,177, reflecting a 38.26% increase from January 16, 2026.
The following year, on January 16, 2028, the expected value is $228,621, indicating a 35.74% increase from the previous year.
By January 16, 2029, the projection rises to $306,176, showing a growth of 33.73% from January 16, 2028.
Finally, on January 16, 2030, the projection is $403,932, representing a 32% increase from January 16, 2029.
Growth Rates:
January 16, 2025 to January 16, 2026: 41%
January 16, 2026 to January 16, 2027: 38.26%
January 16, 2027 to January 16, 2028: 35.74%
January 16, 2028 to January 16, 2029: 33.73%
January 16, 2029 to January 16, 2030: 32%
Notes
purpose of this guide: learn to react and take advantage to Bitcoin volatility, instead of trying to hedge against it
can we predict future price? just like with weather in the future, we can't predict it 100% exactly, but we can have reasonable expectations with varying degrees of confidence
cyclicality
probability ranges
nocoiners look at bitcoin price chart in linear scale, both for time and price
most bitcoiners realize it's better to look at bitcoin price in log scale
when you look at the chart from log scale for price and in log scale for time, you notice a pattern: bitcoin grows according to power law
patterns and cycles: bitcoin monetization periodicity and predictability
bitcoin price behaves in a regular fashion, when you look at log-log chart
exponential up for 1 year: bull market
exponential down for 1 year: bear market
2 year along the power law
market sentiment estimation: fear & greed.
as long as we can see people getting into Bitcoin while carrying any kind of debt on their balance sheets, expect relatively high volatility and cyclicality to continue
what should you do when you feel bearish?
what should you do when you feel bullish?
focus on price & time
power law theory - explanation
price
addresses
hashrate
always go back to your budget & use power law theory just to get a sense where we are
don't worry too much about timing the market, focus on spending time in the market
zoom out, start looking at time in log scale
understand Bitcoin monetization will take a century
if you use Bitcoin as your primary money, all of this will be very easy
think in terms of quantity and quality of your time - bitcoin fluctuations should mean increasing or decreasing quantity and quality of your time: "I have 6 months of my current quality of time saved. If I double my quality of time by spending double of what I spend now, I'll have 3 months of my time saved. If bitcoin doubles in price, I'll have 12 months of my current quality of time saved. if bitcoin price gets cut in half, I'll have 3 months of my time saved.
working means trading your time for money, so you can trade money for higher quantity & quality of time later
idea of your bank of time that you are trading for more & higher quality of time: 40hours in a week, 160 hours in a month, 1700-1900 hours in a year, 17000 - 19000 hours in a decade
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