The “Power Law Cycle Cloud” model is based on the assumption that Bitcoin’s price movements are cyclical and follow certain mathematical laws. This model analyzes historical price patterns and applies the so-called “power law,” which is used in statistics and physics to describe relationships between two variables that scale across multiple magnitudes. By applying this law to Bitcoin, the model attempts to identify recurring patterns that can help predict future highs and lows.
Capitulation Phase: The End of the Bull Market
In 2021, Bitcoin peaked at 60,000 US dollars, followed by a massive drop to 18,000 US dollars, identified by Doctor Profit as the capitulation phase. The absolute bottom of this phase was reached during the FTX crash, when the price fell to 15,400 US dollars. Doctor Profit emphasizes that this price level is historically significant and serves as a long-term bottom. Investors who entered at prices between 16,000 and 18,000 US dollars caught the absolute low.