It seems like everyone wants to know the best time to buy crypto – right?
Two economists from Yale University have recently researched and outlined a basic strategy for identifying the best buying opportunities for cryptocurrencies. After studying the past performance of the three most popular digital assets, they identified a couple of methods that will help any investor to predict price movements.
One of the things that makes choosing an entry point for buying crypto hard is – volatility. Bitcoin is an example of that and a cryptocurrency which tends to swing over just a few hours.
The two Yale economists believe that they have identified two factors that can provide information about the potential price movements. In their paper which is named Risks and Returns Of Cryptocurrency, they explore the historical price patterns in an effort to identify the factors that can determine the price movements over a short period of time.
After studying the price movements during the period 2011-2018 for Bitcoin, 2015-2018 for Ether and 2012-2018 for Ripple, they were able to identify the two factors – naming them the “momentum effect” and the “investor attention effect”.
The first factor is the momentum. In the report, they note that the price of Bitcoin has many times increased rapidly during a single week. As Tsyvinsky (one of the researchers) explained to CNBC:
“Momentum is actually something simple… If things go up, they continue to go up on average, and if things go down, they continue to go down.”
So, the momentum basically focuses on buying currency following a week in which the price had experienced a sharp upwards trend – around 20% – and selling a week later.
The second factor was the “investor attention effect” which simply means that the amount of interest around cryptocurrencies can be another thing to help with the prediction of price movements. As they said in the report, Google Trends and Twitter posts are good indicators of investor attention.
“A one-standard-deviation increase in the Twitter post count for the word ‘bitcoin’ yields a 2.50 percent increase in the 1-week ahead Bitcoin returns.”
Still, the pair of Yale University researchers also stressed that this is not advice to investors – and the metrics are neither hard nor fast rules.
“A one-standard-deviation increase in the Twitter post count for the word ‘bitcoin’ yields a 2.50 percent increase in the 1-week ahead Bitcoin returns,” Tsyvinsky concluded.
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“Similar to 2015, 2019 may be the year of accumulation.’’Another crypto researcher Willy Woo said that while a crash of bitcoin to $3,122 could lead to an increase in volume, it won’t show signs of starting of the accumulation period. He pointed out:
‘’Despite the technical setup that suggests bullishness is possible, there’s not a lot on-chain volume to fuel a prolonged up move. What we saw in the last 7 weeks was a spike of on-chain volume driven by volatility, coins moving to exchanges to trade. The initial volume spike false signalled a faster detox and an earlier end to the bear market, but in fact it was a volatility side effect. That move from $6k to $3k created immense trade volume, but it was in no way a signal that accumulation volume had begun.’’Until evidence for the accumulation of crypto assets shows up, there are still expectations of high volatility levels.
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‘’But this, of course, is not a reason to bury cryptocurrencies. There are both light sides and dark sides, as in any social phenomenon, in any economic institute. And we should just watch closely what happens to them.’’He continued to discuss social inequalities and how the global digital transformation is speeding up saying the cryptocurrency is a part of that fast-going phenomena. The news comes right after major media outlets published the story of Russia’s plan to purchase $10 billion worth of BTC. Turns out that the news was fake. The Russian economist from the Presidential Academy of National Economy and Public Administration Vladislav Ginko pointed out that he strongly believes that Russia might use Bitcoin to fight economic sanctions and this story swamped the media and got massively exaggerated. Russia is, however, preparing a crypto bill that will provide stable cryptocurrency regulation in the next two months. The Duma State will be drafting a regulatory framework in February to regulate ICOs and crypto crowdfunding.
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"TRON is the most ambitious in the dapp field, with a $2 billion Project Genesis launched in the second half of the year. In addition, it spends $100 million on TronArcade to promote its dapp ecosystem."TRON (TRX) launched 97 decentralized applications in 2018, while its ecosystem and community have been growing at an alarming rate. This week, TRX was added to OKCoin, which is one of the largest US exchanges, in order to be traded against fiat, Bitcoin and Ethereum. The report also showed that gambling accounted for $3 billion in transactions over the course of 2018 in dApps.
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