Bitcoin is nearing a power law support line Fidelity has tracked since 2015

Summary

• Bitcoin is approaching the lower support line of a long-used power-law price model around $58,000, suggesting it is nearing a historical accumulation zone.
• Measures of how far bitcoin trades below its trendline and relative to gold have fallen to depths last seen at the 2018 and 2022 lows, but Fidelitys Jurrien Timmer is not yet calling a bottom.
• Timmer expects bitcoin could drift sideways near support for months absent a liquidity catalyst, noting that speculative capital has rotated from bitcoin to gold and now into semiconductor stocks.

Jurrien Timmer, Fidelity's director of global macro, says bitcoin is drifting toward the bottom edge of the model he has used to track it for years.

That model is the power law, which plots bitcoin's entire price history on a logarithmic chart bounded by three curves — an upper resistance line, a middle trendline, and a lower support line that has caught every major bottom since 2015.

On Timmer's latest chart the support line sits near $58,000, and bitcoin at about $62,700 is closing in on it.

The lower panel is where he expects accumulation. It tracks how far bitcoin trades above or below the power law trendline, and that gap has swung to negative 56%, a depth the chart labels the accumulation zone and one that lined up with the 2018 and 2022 lows. The 52-week reading on the bitcoin-to-gold ratio has fallen just as far, to around negative 100%.

Timmer is not calling a bottom just yet. He has said the speculative premium that pushed bitcoin past $120,000 last year is largely gone, that global money supply growth is slowing, and that he sees no catalyst for a reversal until liquidity returns.