Let's say BTC goes to $10 million or whatever by a few decades from now. The power law theory would have it become a much lower vol instrument in dollar terms with far lower expected forward returns against the dollar. Would it not eventually hit a point where it has expected forward returns of something like [GDP growth + fiat debasement + natural deflation] over the long run? I don't know how this works out, but something in the high single digits, perhaps? This would result in low exponential growth, not a continuously diminishing power law.
Say the power law theory is predictive and that Bitcoin is here to stay for the long haul. The power law must break and turn into an exponential growth curve eventually, right?
byu/thisistheperfectname inCryptoCurrency
Posted by thisistheperfectname
3 Comments
power law doesnt really break into exponential – more like it flattens out when market gets saturated and you run out of new buyers to fuel the returns
you have it the other way around. exponential is not stable over the long term.
It’s the opposite imo, the exponential part of the curve is likely over and it’s diminishing (but still great) returns from here on out. That pretty much tracks with the recent lower highs, and why real price movements have underperformed most S2F and power law projections. You simply don’t have unlimited new liquidity to keep fuelling ad infinitum.