The Volatility Adjusted Power Law Index (also know as the “VPLI”) is a Power Law chart that incorporates volatility adjustments where other Bitcoin charts do not. By correcting for volatility, this model helps provide investors and analysts with clear Bitcoin value regions indicating across the Bitcoin lifecycle.
When the chart is “hot” (indicated by red values on the chart), this represents the Bitcoin price is overbought relative to its historical average.
When the chart is “cold” (indicated by blue values on the chart), this represents the Bitcoin price is oversold relative to its historical average.
The abbreviation “VPLI” is short for Volatility adjusted Power Law Index. The Bitcoin VPLI is therefore the Volatility adjusted Power Law Index applied to Bitcoin’s price.
The Bitcoin VPLI chart can be interpreted as a data point that represents how under or overvalued Bitcoin’s current price is relative to the power law model after adjusting for volatility. A value above 50 would suggest that Bitcoin’s current price is overvalued and a value below 50 would suggest that Bitcoin’s current price is undervalued.
No, the Bitcoin VPLI chart is primarily intended to be utilized as a long term indicator, designed to be used alongside various other high signal metrics to assess the broader market structure of Bitcoin.
The model adjusts for long term volatility due to the rapidly appreciating nature of Bitcoin’s price relative to US dollars and reflected in the exponential rate at which many new technologies (such as the Bitcoin protocol) are adopted globally.
This information is for educational purposes only. Any Information found on this site is not to be considered financial advice.
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