What is r²
r² measures how well the data fits the model. It tells us what share of the observed behavior can be explained by the power law relationship.
In our current model, that fit is very high, above 90%. This means most of Bitcoin’s long-term price behavior aligns with the scaling relationship. The remainder reflects deviations around the trend.
Price will move above and below the implied line. Those deviations can be measured as distance from the structure.
r² and deviation are two sides of the same coin: fit and distance.
A consistently high r² suggests the structure continues to describe the data well. A declining r² would indicate that new data is drifting further from the established trend.
This is where the idea of structural integrity becomes practical. Rather than reacting to price alone, we can examine the exponent and the fit to determine whether the structure remains intact.