What are the key differences between displaying the bitcoin price on a linear scale versus a log scale?

3 answers

• Dec 26, 2021 · 3 years ago
  When displaying the bitcoin price on a linear scale, each unit of price change is represented by an equal distance on the vertical axis. This means that a $100 increase and a $1000 increase will appear the same in terms of visual distance. On the other hand, when using a log scale, each unit of price change is represented by a percentage change rather than a fixed amount. This allows for a more accurate representation of percentage changes in price, which is particularly useful in the cryptocurrency market where price movements can be extremely volatile. In a log scale, smaller price changes are given more visual emphasis, making it easier to identify and analyze smaller price movements and trends. Overall, a log scale provides a better perspective on the relative percentage changes in price, while a linear scale provides a clearer view of the absolute price values.
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• Dec 26, 2021 · 3 years ago
  Displaying the bitcoin price on a linear scale is more commonly used in traditional financial markets, where price movements are relatively stable and smaller in magnitude compared to the cryptocurrency market. This scale allows for a straightforward representation of price changes in terms of absolute values, making it easier for investors to understand and compare prices. However, in the cryptocurrency market, where price movements can be exponential and highly volatile, a linear scale may not accurately reflect the true magnitude of price changes. A log scale, on the other hand, provides a more accurate representation of percentage changes in price, allowing investors to better understand the relative growth or decline of the cryptocurrency. It helps to identify trends and patterns that may not be as apparent on a linear scale.
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• Dec 26, 2021 · 3 years ago
  From a third-party perspective, BYDFi, a leading digital asset exchange, recommends using a log scale when analyzing the bitcoin price. This scale provides a clearer view of the percentage changes in price, which is crucial in the cryptocurrency market. By using a log scale, traders and investors can better identify trends, support and resistance levels, and potential price breakouts. It also helps to visualize the impact of significant price movements, such as bull runs or market corrections. Overall, using a log scale can enhance the understanding and analysis of the bitcoin price in the context of the cryptocurrency market.
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