Social scientist and author Prateek Goorha has found that bacterial growth phases are similar to the market behavior of Bitcoin. His main findings revolved around observations of growth. During bacterial growth, there is a lag phase, exponential growth phase, a stagnation phase, and then a death or decay phase. The same thing is observed in the Bitcoin market long term due to the addition of new technology and networks.
Goorha likens the lag phase to an acclimation period where bacteria don’t multiply but get used to the environment in preparation for growth. This can be compared to the time before a Bitcoin rally, when a new network or technology is integrated into Bitcoin, like exchanges or Bitcoin ATMs. The market has first to get used to the new technology or network and then, it begins growing.
The exponential phase during bacterial growth is when bacteria keep dividing until resources are exhausted. In the case of Bitcoin, this means Bitcoin’s price rises until the mechanism that caused the rally gets exhausted. For example, once institutional investors acclimate to crypto hedge funds, then Bitcoin’s price will rise until the amount of investments in crypto hedge funds is at a plateau.
The stagnation phase occurs for bacteria once resources are exhausted, followed by a death or decay phase where the bacteria begin to die off and the population decreases. For the Bitcoin market there appears to barely be any stagnation phase, however, as Bitcoin typically goes right from exponential growth to decay. Basically, this is caused by more growth in the Bitcoin market than the average resources available.
After this, the Bitcoin market goes back into the lag phase, which can be better thought of as the acclimation phase. The Bitcoin market finds its equilibrium, learns from the crash, and utilizes the networks and technology integrated with Bitcoin to find stability.
That’s about where the Bitcoin market is as of this writing in October 2018. With stability, comes time for innovation and eventually, a technology or network will be added to Bitcoin that will cause the next rally.
Looking at the chart of Bitcoin’s price since it launched, exponential growth phases for Bitcoin have peaked in 2011, 2013, and 2017. Based on Bitcoin’s history, it could be projected that it will rise to further peaks in the next decade, likely with major rallies during that time.
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