12.06.202606:42 Forex Analysis & Reviews: The Power Law Will Drive Bitcoin Up to $400,000

Bitcoin and Ethereum show no desire to correct even slightly. Over the past week, Bitcoin has lost 17% of its value, while Ethereum has dropped 21%. One can debate endlessly about why the cryptocurrency market is falling again, but we have been warning about this consistently for the past three months, even without considering geopolitical factors, inflation, and changes in the Federal Reserve's sentiment.

Meanwhile, experts have found a new reason to believe Bitcoin will soon enter a new bullish trend that could take it to $400,000. According to the "Power Law," Bitcoin is currently trading below its fair value of $134,000 and below its "lower range" of $67,000. The upper range is set at $404,000. What is the "Power Law," and what do these levels and ranges represent? Essentially, it is an ascending long-term channel with three boundaries, including the middle range. It is not exactly a channel; it more closely resembles a hyperbola. However, the essence is similar. Since 2017, Bitcoin has hit the lower boundary of this hyperbola three times, and in 2026 (now), it has reached it for the fourth time. The upper boundary has been hit only twice since 2017, which indicates that Bitcoin's long-term growth is slowing.

However, analyst Mark Harvey believes that Bitcoin rarely deviates from this model. Every time Bitcoin reached the "bottom" of the hyperbola, a powerful recovery began. We would like to remind traders of several important points. First, any model eventually becomes irrelevant. Second, Harvey does not explain what constitutes "fair value" and why it is set at $134,000, a level that Bitcoin has never reached in its history. Third, any channel is eventually broken, and any bullish trend comes to an end. Fourth, past profitability does not guarantee future profitability.

Trading Recommendations for BTC/USD:

Bitcoin continues to form a full downward trend and correction against it. We continue to expect a decline toward $57,500 (the 61.8% Fibonacci level from the three-year upward trend), and there are still no signs of an upward trend emerging. The latest bearish FVG formed in the $68,000 - $70,700 range; therefore, this area serves as a point of interest (POI) for short positions in the coming weeks. The cryptocurrency may correct in the near future on the 4-hour timeframe, so if traders wish to trade against the trend, they can consider long positions from bullish patterns.

Trading Recommendations for ETH/USD:

On the daily timeframe, the formation of a downward trend, which began in August of last year, continues. The key pattern for selling has been and remains the bearish order block on the weekly timeframe. As we previously warned, the movement triggered by this signal can be strong and prolonged. We do not believe it has ended, as there are no signs of the downward trend in either Bitcoin or Ethereum abating. In the near future, Ethereum may resume its decline with targets at $1,391 and $788. An upward correction can be expected when at least some bullish pattern or other signs of a price reversal to the upside are formed on at least the 4-hour timeframe. Among the new POI areas for short positions, we note the FVG in the $1,624-$1,720 range. If this pattern is ignored, traders will receive a signal for a correction.

Notes on Illustrations:

• CHOCH – Change in trend structure.
• Liquidity – Stop Losses, pending orders that market makers use to build their positions.
• FVG – Fair Value Gap. Price moves quickly through such areas, indicating a complete absence of one side in the market. Subsequently, price tends to return and react to these areas in continuation of the main trend.
• IFVG – Inverted Fair Value Gap. After returning to such an area, the price does not react to it but breaks through impulsively, then tests it from the other side.
• OB – Order Block. A candle on which a market maker opened a position to gather liquidity in order to form their own position in the opposite direction.