A.I. economics: How cheaper predictions will change the world | Ajay Agrawal
A team of economists at Yale University, having studied the eight-year history of the value of bitcoin, found that analysis of weekly fluctuations and the number of searches can be used to predict market dynamics..
The crypto market is characterized by high volatility, but the results of a study by Yale analysts can clarify the patterns of changes in the MTC exchange rate. They named the first indicator «impulse effect». It is based on the stability of the trend for 1–2 weeks, since after a strong increase in price the coin is usually able to support further growth, and vice versa. The article says that the most effective strategy was buying bitcoin immediately after a sharp jump in the rate, and then selling it seven days later..
Another indicator is the number of searches for the name of the cryptocurrency on Google. Economists have found a strong relationship between this factor and appreciation. The analysis showed that the more requests with the word bitcoin, the higher the likelihood of an increase in its price, and the dynamics can predict a one- and two-week return. Such statistics are available to every investor in the free Google Trends service..
The research results can help not only incumbent traders, but also attract those who fear the unpredictability of the crypto market. In the long term, this can also reduce the number of irrational actions of participants and reduce volatility.
Despite the fact that most of the population of Russia has heard about bitcoin, only 2% of citizens are investing in cryptocurrency now.
text: Ivan Malichenko, photo: Yale University / Flickr