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A Study Points Factors That Can Predict Bitcoin Price?


It’s a common scenario that crypto experts give their opinion regarding the future of Bitcoin and the crypto market as a whole. Tom Lee predicts that Bitcoin is going to reach $22,000 once institutional investors felt comfortable about the regulatory climate. Unfortunately, regulatory clarity within the niche is still a long way to go.

For Yale University financial experts, they have suggested a system that predicts the price trends of major cryptocurrencies. The study was conducted by Yale economist Aleh Tsyvinski and Yukun Liu who is a Ph.D. candidate in the Department of Economics. It was dubbed as the “first-ever comprehensive economic analysis of cryptocurrency and the blockchain technology”.

The paper provided a “risk-return tradeoff” for the major cryptocurrencies including Bitcoin, Ethereum, and Ripple. The data showcased the historical performance of these cryptocurrencies.

The experts were able to analyze the movement of Bitcoin’s price between 2011 to 2018. On the other hand, Ripple and Ethereum data were tracked from 2012 and 2015 respectively.

Discoveries of the Study

Tsyvinski and Liu discovered that cryptocurrencies actually “have no exposure” to stock markets, returns of currencies and commodities, and even to macroeconomic factors. The researchers discovered that the cryptocurrency returns are solely predicted by factors that are specific to the cryptocurrency markets.

One of the factors that was dubbed by Tsyvinski and Liu is the “strong time-series momentum effect”. This means that if Bitcoin’s price is bullish for over a week, it is likely to keep going the following week. It has also been pointed that sharp increase in Bitcoin’s price increases the demand for the cryptocurrency. And also, this leads to a bigger investment. The study discovered that though it is followed by Ethereum and Ripple, the “momentum effect was stronger” for Bitcoin.

There is also a correlation between social media and search engines to the price of cryptocurrencies. Tsyvinski mentioned that “All things can happen. Maybe the statistical patterns that we find are going to completely change. Maybe tomorrow Bitcoin is going to be prohibited by regulators, maybe it’s going to be completely hacked, there are many things one would take into account”.

Bitcoin Back Below $7,000

Bitcoin is getting near $6,000. In fact, many were optimistic a few weeks ago thinking that a Bitcoin ETF would’ve been approved soon by the US Securities and Exchange Commission. However, this didn’t pan out according to how people planned things out. Instead, the agency pointed out their concerns regarding price manipulation.

Cameron and Tyler Winklevoss’ application was denied once again by the US SEC for the second time around. And also, the SEC opted to postpone making a decision regarding the Solid X and VanEck Bitcoin ETF application to September.

Brian Kelly thinks that it is a bad decision for you to sell your cryptos mainly because the agency postponed its plan. He believes that things will be bullish once the agency approved the application.

Will this study help predict Bitcoin’s future price? Considering the volatility of the market, this might actually help in giving investors an idea regarding the short-term tendencies of Bitcoin and other cryptocurrencies. However, if you are in it for the long run, you don’t really need this.



John Jayme

John is a crypto investor, enthusiast and copywriter. He is in charge of daily news and other emerging trends in blockchain technology.