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KAS would be undervalued by at least 40% of its fair price.
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Against Bitcoin (BTC), KAS has been in a bearish trend for more than a year.
Kaspa (KAS) has been one of the featured cryptocurrencies since mid-2023 and much of 2024.
Many miners have turned to this network—among them, the corporate giant, Marathon Digital Holdings—, which has increased the computing power poured into Kaspa and, as a consequence, the price of the Cryptocurrency.
Despite this initial impulse, for months now, KAS is located within a lateral channel.
In the image below, created using the platform tools TradingViewthis behavior is observed in the price of kaspa:
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Kaspa (KAS) price since November 2023. Source: TradingView.
Kaspa’s behavior is striking if we take into account that 2024 has been a very bullish year for bitcoin (BTC) and various cryptocurrencies. On the other hand, KAS – although it set new all-time highs – did not stand out particularly.
What happened to kaspa? Is the bullish party over for this Altcoin of Israeli origin that seeks to be the “digital silver”?
According to the “power law”, there is still room for KAS to continue on its bullish path.
But, before delving into this price projection, it is necessary to explain what the “power law” is.
It reads on the website kaspapowerlaw.commanaged by the investor who identifies himself on social networks as Xetur:
The kaspa power law is a mathematical relationship between the price of kaspa and time, which allows you to predict the possible future action of its price based on historical data. This law is demonstrated by plotting the price of kaspa against time on a log-log graph, where it appears as a straight line.
kaspapowerlaw.com
According to Xetur’s theory, this law is only applicable to 2 digital assets: kaspa and bitcoin.
According to the power law, at the time of publication of this article, the fair price for kaspa would be $0.30. While the market price is only $0.17, as could be seen in the graph above.
It means that KAS would be undervalued by 43%. According to the model, the price of BTC and financial KAS always tends to oscillate around its fair price.
Based on this model, the website kasparainbowchart.com makes a “rainbow chart” that shows where the KAS price is currently and provides an action recommendation for each price.
At the time of this publication, the rainbow chart for KAS shows that It would be a good buying opportunity:
Rainbow graphic for kaspa. Source: kasparainbowchart.com
Based on this theory, Xetur has commented:
“According to the current rainbow chart, Kaspa may reach $0.70 before hitting historical resistance. However, we have never seen how Kaspa performs in a bull market. Will we overcome the historical power law? I hope so!”.
Xetur, investor.
The creator of the power law for bitcoin, Giovanni Santostasi, has spoken about the application of this theory to the case of kaspa.
Although Santostasi is not a “fan” of KAS, his comments They are benevolent for this alternative cryptocurrency.
This specialist says: «KAS is an interesting currency. I know the maxis hate it because they claim it is a ‘competitor’ to Bitcoin. There is no second best or third best.
Still, he adds that he was surprised when he was asked to analyze KAS (and other currencies) because he discovered that they seem to follow a power law. He clarifies that it does not do it “as perfectly as bitcoin.”
His reaction to such a discovery is a display of intellectual honesty:
“I didn’t like this because I wanted BTC to be the only power law asset, but as a scientist I have to accept reality and data as it is. “So I reported the discovery to the person who asked me to verify it and then it became a popular notion among KAS investors that KAS was the only coin besides BTC that followed a power law.”
Giovani Santostasi, creator of the power law.
Despite this optimism, Santostasi warns that KAS is slowly deviating from the power law. He assures that he will continue investigating the topic to see if this theory is still applicable to Kaspa.
Meanwhile Kaspa holders are still enthusiastic about the project. The aforementioned Xetur says that its investment portfolio consists of 70% BTC and 30% KAS.
He bases his investment decision on the argument that “bitcoin is king” and “will be the global reserve asset and treasury of countries, corporations and institutions.”
On the other hand, according to this investor, “kaspa is digital silver and a superior technology. If the market is rational, in the long term it will recognize it. Adds Xetur: “In addition, it is currently very undervalued, making it my biggest ‘value investment’ from an asymmetric risk/reward perspective. I expect that in the long term Kaspa will have much higher returns than Bitcoin and, eventually, the “correct” decision will have been to be 100% allocated to kaspa.
Will Xetur be right? Time will tell. For now, his decision does not seem to have been wise and he would have benefited from having greater exposure to bitcoin. The thing is KAS price measured in BTC has been in a sharp downtrend since late 2023.
Clarification: This article is written for informational purposes. It does not constitute financial advice or an investment recommendation. Each investor is responsible for doing their own research.
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