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Giovanni Santostasi Interview: Predicting Bitcoin Price Movements With Mathematical Precision

Last Updated February 26, 2024 4:42 PM
Andrew Kamsky
Last Updated February 26, 2024 4:42 PM

Giovanni Santostasi, a renowned Ph.D. in physics and astro-physicist turned Bitcoin analyst, has made a huge discovery in Bitcoin’s price analysis. With a background in studying gravitational waves and neuroscience over three decades, Giovanni’s transition to analyzing Bitcoin as early as 2012 led him to uncover his Bitcoin Power Law.

A universal law, which explains how mathematics governs natural phenomena and offers a mathematical lens to forecast Bitcoin’s future prices with a high degree of accuracy. 

BTC Power Law Reddit Post
BTC Power Law Reddit Post

In a recent discussion with CCN writer Andrew Kamsky, Giovanni explained that he has had a diverse research career, ranging from studying gravitational waves to the biophysics of sleep, and how these studies served as a preparation for his discovery of the Bitcoin Power Law, which he took inspiration from a 2012 Bitcoin blog post , which plotted a random line through the chart. 

Biological Systems That Illustrate A Power Law In Nature
Biological Systems That Illustrate A Power Law In Nature

Giovanni explains how “this law underscores the predictable aspects of Bitcoin’s market fluctuations” and cements Giovanni’s legacy in merging astrophysics and financial analysis to predict Bitcoin’s trajectory should Bitcoin truly follow this Bitcoin Power Law.

Giovanni Explains “As The Size Of A Mammal Increases, Its Metabolic Rate Doesn’t Scale Linearly But Follows A Power Law.”

To help understand and introduce the Bitcoin Power Law Giovanni explains how Mammals exhibit a power law through their metabolic rates and body mass, showcasing a remarkable linear pattern (in a log-log chart) that spans across all species. This relationship reveals that the metabolic rate of mammals scales to the ¾ power of their body mass. 

Giovanni describes this phenomenon, highlighting that, “as the size of a mammal increases, its metabolic rate doesn’t scale linearly but follows a power law. This means larger mammals are more energy-efficient in relative terms than smaller ones.”

This scaling law illustrates how nature conserves energy across different scales of life, from the smallest mouse to the largest elephant. The implications of this power law is interesting, because Giovanni explains how this principle underlies not just the physical attributes but extends to growth patterns and lifespan. It’s a testament to the efficiency and harmony in nature’s design, governed by power laws.

Bitcoin’s Growth Dynamics: “Bitcoins Slope Gives You An N of 5.8 And So The Longer And Earlier One Hodls The Larger The Rewards” Reveals Giovanni

Giovanni identifies the power law exponent “N” for Bitcoin as roughly 5.8, signifying a large and steady expansion over the years. He explains that “the slope gives you that N,” highlighting the method used to derive this figure. The exponent, 5.8, uncovers how Bitcoin’s valuation and acceptance have surged in a manner that outpaces simple linear growth yet remains below the threshold of exponential escalation. 

Giovanni’s discovery of this “5.8” value sheds light on Bitcoin’s exceptional trajectory, illustrating its growth in both the economic and technology domains. Through his words, “Bitcoin, it’s 5.8… it’s a big number,” Giovanni conveys the impactful nature of this growth, positioning Bitcoin as a force of nature kind of entity compared to other investment assets. 

For non-coiners, the risk lies in missing out on these potential gains. Giovanni asserts, “the longer you wait, the more you lose,” highlighting the diminishing window of opportunity to benefit from Bitcoin’s growth. Non-coiners are at a significant disadvantage without exposure to Bitcoin is his opinion whilst holders are at an advantage likely to continue to see growth in their hodl position.

Unveiling The Power Law: A New Perspective On Bitcoin

Giovanni sheds light on the intricate relationship between many power laws in the behavior of BTC, these include hashpower, addresses and transactions which are all a power law of price and of themselves. 

Bitcoin Transactions Versus Price
Bitcoin Transactions Versus Price

Giovanni articulates an observation, stating, “When examining the relationship between the number of transactions and the price of Bitcoin, a surprising pattern emerges. Instead of a chaotic and unpredictable relationship, there’s a clear, straight line when plotted on a log-log scale.” This revelation suggests a fundamental order within Bitcoin’s market, challenging the narrative of its unpredictability.

Researching further into the core of his findings, Giovanni elaborates on the significance of the power law relationship observed. “This straight line indicates a power law relationship between transactions and price, suggesting that Bitcoin’s market is not as random as it appears. Instead, it operates under a complex yet predictable pattern.” 

Giovanni Explores Other Power Law Dynamics Between Active Addresses And Price

Giovanni observed a consistent relationship between the number of active Bitcoin addresses and its price, pointing out, “The relationship between addresses and price also demonstrates a power law dynamic.” 

This relationship suggests that as Bitcoin’s network grows, its value does not increase linearly but rather at a pace that suggests a deeper, systemic pattern of growth influenced by network effects.

Historical Price Behavior Analysis By Giovanni

Giovanni tapped into historical data, noting that the Bitcoin price “looked like exponential growth initially but now we know it is not exponential but a power law is at play.” 

Bitcoin Power Law Path To $1 Million Chart
Bitcoin Power Law Path To $1 Million Chart

This approach to analyzing Bitcoin’s price over time illustrates how its growth dynamics are more complex than simple exponential models might suggest like the Stock-To-Flow (STF) model.

Giovanni Explains The Underlying Mathematical Relationship As “Bitcoin Behaves More Like A Law Of Nature Than An Asset”

He further elaborated on the mathematical foundations of his observations, stating, “By measuring the slope in a log-log plot of Bitcoin’s price against time, we find a consistent exponent (N), which is indicative of a power law relationship.” 

This mathematical grounding provides a quantifiable measure of Bitcoin’s growth pattern, reinforcing the argument for its adherence to a power law after which Giovanni explained that Bitcoin behaves “more like a law of nature than an asset.” He argued, “like many natural and social phenomena that follow power laws, Bitcoin’s growth dynamics suggest it’s part of a broader pattern of complex systems.”

Giovanni Explains “Bitcoin Does Not Exactly Follow The S-Curve Model”

Giovanni explains how “The S-curve model typically applies to the adoption of technologies, where initial slow growth is followed by a rapid increase and eventually a plateau as the market becomes saturated. However, Bitcoin’s trajectory doesn’t fit into this model.” 

Giovanni highlighted a fundamental difference in how Bitcoin’s market behavior is modeled when compared to traditional technologies. This distinction points to the unique nature of Bitcoin’s expansion, suggesting it may not be subject to the same limits of adoption saturation.

Reevaluating Bitcoin’s Future Through The Power Law

Regarding the Stock-to-Flow (S2F) model, Giovanninoted that, “The S2F model predicts an exponential growth based on scarcity, but if you look at Bitcoin’s behavior through the lens of a power law, you see a more complex interplay at work.”

Exponential Chart Versus Power Law
Exponential Chart Versus Power Law

This perspective sheds light on the broader economic and social factors influencing Bitcoin’s adoption beyond mere scarcity, suggesting a more intricate and sustained growth trajectory. 

Giovanni’s analysis suggests that while models like S2F offer valuable insights, they might not fully uncover the varied drivers behind Bitcoin’s growth, emphasizing the importance of considering multiple models and theories to understand Bitcoin’s future potential.

The Resilience Of Bitcoin: Understanding Bitcoin Bull Markets Through Power Law

Discussing the nature of these bubbles, Giovanni further elaborates, “These bubbles, while they appear as deviations, align with Bitcoin’s broader, stable growth trend over time. It’s almost as if Bitcoin goes on a holiday, experiences a rush, and then returns to its disciplined path.” 

This perspective offers reassurance that Bitcoin’s trajectory remains intact, robust and predictable despite the dramatic ups and downs, reflecting a more profound stability within its market dynamics. Its fair value is plotted as a line straight through the chart with a support and resistance line at either end. 

When Bitcoin is above the fair value, it is overvalued in accordance with its power law behavior and vice versa when price is below the fair value trendline. The current fair value at the time of this article and conversation was $60,000, and the price of Bitcoin $52,000, placing it at a 17% discount to fair value.

Bitcoin Power Law: Trend Line Versus Support And Resistance Lines
Bitcoin Power Law: Trend Line Versus Support And Resistance Lines

Predicting Bitcoin’s Future Through the Power Law

“Using the power law, we can make educated guesses about Bitcoin’s future value, considering its past performance and current trends,” Giovanni notes. This predictive model is a game-changer, offering strategic insights for long-term investment planning in the cryptocurrency space.

Looking forward, Giovanni is optimistic about the implications of his findings. “The power law suggests that Bitcoin’s growth could continue in a predictable pattern, potentially reaching unprecedented heights,” he outlines. This vision of Bitcoin’s future should not only excite investors but reinforce the narrative surrounding cryptocurrency’s viability as a safe and long-term asset.

Giovanni Price Forecast And Vision For Bitcoin’s Future In The Next Bull Market

Giovanni provided a detailed prediction (not to be taken as a trading advice) for Bitcoin’s next price peak, stating, “Based on the power law model, the next price peak for Bitcoin is projected to be around $210,000 plus or minus ten percent” 

This forecast is derived from analyzing past cycles, the growth trajectory defined by the power law, and the impact of Bitcoin halving events on price dynamics. 

Giovanni’s Next Bitcoin Price Bottom Estimation

Regarding the next price bottom following the projected peak, Giovanni remarked, “After reaching the peak, the model suggests a correction towards a bottom, which will be approximately $60,000.” 

Bitcoin Cycle Peaks And Bottom
Bitcoin Cycle Peaks And Bottom

This estimate considers the historical patterns of retracement following Bitcoin’s cyclical peaks and the support levels indicated by the power law model over time.

Giovanni’s innovative model pinpointed the bottom of the current cycle at $15,000, showcasing his belief in his Bitcoin Power Law. He stated, “My Bitcoin Power Law model, passed through rigorous analysis and observation, accurately forecasted this cycle’s low point. This wasn’t mere chance; it’s rooted in Bitcoin’s adherence to a power law, distinct from traditional asset behaviors.” 

Giovanni’s commentary underscores the precision of his approach. “This $15,000 bottom reflects Bitcoin’s predictable patterns within a power law framework, affirming its reliability as an analytical tool,” he remarked. This precise prediction validates Giovanni’s expertise in Bitcoin’s market dynamics and his confidence in the model’s projection of a future rise to $210,000 and then retracing back to $60,000.

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