Cryptocurrency

Yale economists have found when is the right time to buy Bitcoin

Last December, Bitcoin’s maximum value reached $ 20,000 to follow a downward course, mainly due to the phasing-in or phasing-in arrangements for controlling the use of cryptos. Of course, watching Bitcoin’s rally, too many of us had the same thought: “I wish I had bought it when it was cheap …”

Though it is rather slow to get the crazy win (such as 50 Cent raper, who once said he was bankrupt and a little later discovered that the forgotten bitcoin was worth millions now), there seems to be some room for significant profit.

The good news comes of the US and specifically two Yale University economists who seem to have discovered a method of predicting the value of bitcoin analyzing the “behavior” of cryptomania in the past. The most popular, but also volatile, currency in the past ranges between $ 6,000 and $ 9,000, and its current value is currently around $ 6,300.

But these fluctuations in the value of bitcoin have specific motifs. Thus, Yukun Liu and Aleh Tsyvinski analyzed these fluctuations in depth for seven years to understand which indicators can be used to determine the future value of cryptos.

Their findings, published in the National Bureau of Economic Research, seem to point to the fact that bitcoin and other cryptos differ from equities, conventional currencies and other commodity markets in terms of factors that affect their value at the market.

“We show that the odds of cryptos can be predicted by factors that are specific to the cryptos markets,” the study said. In particular, they found that the so-called “time-series momentum phenomenon” is very intense in this market, ie its performance in the past is a prediction for its returns in the future. A second element, the interest that exists and is potentially enhanced by some factors can predict with great certainty their performance.

This phenomenon strongly affects cryptosanism and practically means that if bitcoin has good performance now then it is likely to continue to have, at least in the short term. Economists have designed a “simple strategy” that investors could follow to take advantage of this trend of cryptography.

According to this, an investor must buy bitcoin today if his value has risen more than 20% last week.

“This strategy brings excellent returns,” said Tsyvinski at Yale News.

Economists also estimated that there is a potential of 0.03% for the bitcoin value to be zeroed and rendered useless. This figure appears to be very small, but it is much higher than the odds for other currencies such as the euro (0.009%) or the Australian dollar (0.003%). Finally, the question arises as to how many bitcoins should be in the hands of an investor. The answer is between 1% and 6%.