LOADING

Type to search

Spotlight

BTC price swings tempered with Log Scale

btc price

Cryptocurrency is notorious for its wild swings in value. A log scale can help put the btc price into long-term perspective.

Look at any crypto chart, bitcoin or otherwise, and you’ll see the rollercoaster price ride that the sector has become famous for. For those with a short- to medium-term perspective like day traders or swing traders this is the most useful (and terrifying) chart, it doesn’t do justice to the big picture. For that, we need to switch to a log scale.

A log scale treats a similar percentage rise the same way, with equal space on the y-axis of the chart. So every 10x rise looks the same size, rather than the rise from $100 to $1,000 being almost 9 times as large as the rise from $10 to $100.

LOG SCALE

When dealing with crypto, which has historically posted huge increases in price, this helps give a better sense of the true growth. Yes, a ‘drawdown’ (a euphemism for ‘crash’) of 85% is significant, but it’s less dramatic in the context of bitcoin’s 100x growth, from the bottom of the last bear market to the top of the 2017 bubble.

Bitcoin has staged several major bull markets in the time it has been publicly traded. Each one has typically seeing growth of 10 to 100 times in price, before a correction. What’s noticeable is that – for all the market gets overheated – each cycle ends an order of magnitude higher than the last. This is one of the reasons why the ‘HODL’ meme is so powerful in crypto: those who sit tight through the ups and downs have made spectacular returns over the course of a few years, even when taking crashes and long bear markets into account.

As leading trader Alessio Rastani comments, this is the chart that the ‘Doom and Gloomers’ tend to ignore, and that gives a far better sense of what the history of bitcoin has really been.

Tags:

You Might also Like