Why making predictions about the price of Bitcoin is baseless?

Why making predictions about the price of Bitcoin is baseless?
25 January 2022     3686

Why making predictions about the price of Bitcoin is baseless?

If you have ever been in touch with Bitcoin, you have probably heard very radical predictions, predictions and promises from cryptocurrencies about the fall or rise in the price of this or that cryptocurrency.

Most of these assessments focus on an absolute change in the status quo; For example: Bitcoin will become $ 150.00! Or will be depreciated altogether.

It is natural for Jobs to be skeptical of any such or similar predictions. Given that price analysis is very difficult, sometimes impossible, when trying to convince us it is mainly related to non-analytical reasons; Largely, in an attempt to increase or decrease popularity for their own financial purposes.

In general, if you look at similar predictions from "experts" in the past, they are very rarely justified. People also remember only the cases that were justified (Confirmation bias). Which leads to additional similar predictions from these "experts", and they - naturally are not justified.


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Analysis

According to Nathan Reif, price forecasts always face the problem of analysis, given that such information is very difficult to obtain. A very high price, of course, arouses the interest of investors. For those who hold $ 0.01 a word, it is not difficult to convince them that it will turn into tens of thousands of dollars; Believing this is a kind of hope for them. However, in many cases such promises are followed by bringing in extra money by hopeful people. Where it is natural to start acting on the principle of lottery.

According to macroeconomist Peter Tchir, such assessments, specifically in relation to Bitcoin, are unfounded. Tchiri accuses the leaders of using unconvincing arguments in this area. He thinks they are most likely doing so because the success of Bitcoin (cryptocurrency in general) is desirable for them because of their personal investments.

Well-known economist Paul Krugman even believes that Bitcoin is a bubble. However such a bubble that will last a long time.


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This does not mean that the number of crypto-millionaires is not growing more and more, or even that of the people who soon decided to invest in this field and became rich. But one is to acknowledge and judge all of this, and the other is to present the "permabull" (investor who constantly behaves as if his property is rising in price) approach as an analytical examination.


Difficulties in the new field

Leaving aside the prophets page, it is also important to understand that the cryptocurrency field itself is very difficult to analyze. Even successful developers who are busy all day with various coins, tokens, companies and related events still face great difficulties with analysis.


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Suppose a person really has the opportunity to completely filter this information, remove important details for him, formulate conditions and conclusions, he will still have to deal with the fact that this industry is young and generally not tried, reproduced models, theories and strategies that help him to connect the situation The future with a cause-and-effect chain.

Even if the price analysis is successful, its methodology is correct, it is still impossible to take into account all the variables. They may soon discover a factor in the crypto world that plays a much bigger role than anyone has ever imagined. This means that we should always be skeptical of such assessments and thoroughly investigate the reasons why investors believe that their predictions will be justified.

Ika Nizharadze

Ika Nizharadze

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