BITCOIN: THE BEST TIME TO BUY THE CRYPTOCURRENCY, ACCORDING TO ECONOMISTS


Economists from Yale University have come up with a technique to predict the price of bitcoin based on the cryptocurrency's past behaviour. The notoriously volatile cryptocurrency has fluctuated between $6,000 and $9,000 over the last few months, with its current value hovering around $6,343, however there patterns within these market movements. Yukun Liu and Aleh Tsyvinski analysed seven years of bitcoin price data to figure out which indicators can be used to determine the future price of bitcoin. The Yale economists also studied ripple and ethereum to see whether other cryptocurrencies followed the same price patterns as bitcoin. Their findings, published in The National Bureau of Economic Researh, established that bitcoin and other cryptocurrencies are entirely distinct from stocks, currencies and other commodities in terms of factors affecting their market movements."In contrast, we show that the cryptocurrency returns can be predicted by factors which are specific to cryptocurrency markets," the study explains."Specifically, we determine that there is a strong time-series momentum effect and that proxies for investor attention strongly forecast cryptocurrency returns."This momentum effect was found to strongly affect cryptocurrency, meaning that if bitcoin is performing well then it is likely to continue doing so, at least in the short-term.

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