Bitcoin: the right time to buy, according to economists

A pair of economists have been analysing the price patterns of Bitcoin, and have a suggestion or two for investors…

It’s no secret that 2018 has been a(nother) dramatic year in the life of Bitcoin, with the price of the currency falling from a high of nearly $20,000, to settling just below $6500 as we find it at the time of writing. This, in turn, has generated a sizeable number of words suggesting that the cryptocurrency bubble has burst.

Yet there are some suggesting the contrary. Vocal cryptocurrency advocate John McAfee has constantly predicted that the bull market is coming, and prices will start to soar. And now,  economists from Yale University have published new research in The National Bureau of Economic Research that likewise paints a more positive picture.

In that research, economists Yukun Liu and Aleh Tsyvinski  draw conclusions from analysing seven years of price data for Bitcoin, to look for patterns that may give clues to future pricing. Furthermore, they compared data for Ethereum and Ripple too, and concluded that “cryptocurrency returns can be predicted by factors which are specific to cryptocurrency markets”.

“Cryptocurrencies have no exposure to most common stock market and macroeconomic factors”, they conclude.

Furthermore, the pair argued that the chances of Bitcoin falling to a value of nothing are 0.3%, and instead, put forward that a good time to invest in the currency is when there’s been a week where its value has gone up by 20%. Their reasoning is that Bitcoin price spikes come in short bursts, and that if value has increased quickly, it’s likely to keep climbing for the short term.

There’s the usual caution that any kind of investment is a risk. But it’s worth taking a look at the full paper, that can be purchased here.

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