Bitcoin Structural Integrity: 2026-03-03
Is the worst 5 years behind us?
Bitcoin is trading 43.48% below its implied price, in accordance with the power law. While Bitcoin continues to trade at a deep discount, this has had no significant impact on the long-term model fit.
Daily Drift Diagnostics (2026-03-03)
Exponent: 5.6413 (-0.154%)
R²: 0.943 (+0.0212%)
5Y What?
In a previous article, we showed how rolling exponents over 6y, 8y, 10y, and 12y windows trend towards ~5.65 over time (as does the full price history). This context was built up from an earlier demonstration with 2y, and 4y windows, where you can really see the sensitivity of short-term price.
Since that article, we investigated a few other timeframes for additional research. Today, we’ll talk about the 5Y rolling exponent. Or in other words, the log-log regression of price over a rolling 5-year window.
The worst 5 years on record
The 5Y exponent has sunk to some of its deepest levels in history (3.52). Meaning, the last five years of price data, collectively taken as a rolling window, have underperformed the power-law implied price significantly. However, it does look like it’s mounting a recovery. If we start seeing Bitcoin shift into a new price regime, we should also expect to see this rolling exponent to lift towards 5.65 (eventually crossing over)
When you bring back the 2Y and 4Y plots we spoke about in the introduction, you get the sense we have been here before. Distinctly, around February of 2019.
Overlaying a plot of price deviation percentile shows what happened next. Six months later, Bitcoin would have a rally which would then fade into an even larger blow off top.
At a glance, this looks similar to what happened in 2022. If you look closely however, you’ll see the 5Y curve intersecting the 2Y in a downtrend. Our recent configuration puts us closer to the 2019 setup, where the 5Y intersects in an uptrend.
Applying Power-Law Intuition
The 5Y exponent calculation is done over a rolling window of 1,825 days. Each day, the oldest day drops out and the newest day enters. For the exponent to recover toward the long-term structural trend, the data leaving the window must be replaced by data that adheres better to the power law.
The 2022 low is still in the window. When it rolls out, we are swapping very weak price action for whatever comes next. If price from here trades at or above the power-law line, the new data will “pull” the exponent calculation up. If price stays far below implied, the new data is still weak, and recovery is slower.
Gravity, for Bitcoin
We believe the power law exerts a gravitational pull, acting as an attractor toward the long-term structural trend. Price deviates, but the scaling relationship holds. Over time, as the window rolls, we expect the resultant exponent will naturally trend back towards or, be “pulled back” toward that force.