Yale Economists Share Strategies to Strongly Forecast Bitcoin Returns
At the time when the cryptocurrency industry has recorded a loss of more than $30 billion, two Yale economists believe traders can strongly forecast the volatile market using “potential predictors for cryptocurrency returns.” Aleh Tsyvinski and Yukun Liu published a new study, titled “Risks and Returns of Cryptocurrency,” after researching factors that could accurately predict the cryptocurrency returns. The study found that cryptocurrencies have low exposure to the macroeconomic factors that usually influence stock, currency, and commodity markets. However, there are still some strategies that are common to both traditional and cryptocurrency price trends. To find them, Tsyvinski and Liu analyzed the historical data of top coins, including Bitcoin, Ethereum, and Ripple, and eventually determine two key factors that could predict the market’s next trend. They are called “Momentum Effect” and “Investor Attention Effect”.