You can predict the Crypto Market? Really?

in cryptocurrency •  3 months ago

With everyone panicking in the face of yet another down-leg in the crypto sphere, price prediction 'prophets' are in high-demand. If you look on Twitter or here on Steemit there are thousands of price prediction posts (payouts are pretty good btw).

I can see why this is enticing, especially in those uncertain times. But I have yet to see a single person/system that can consistently predict cryptos better than random guesses ( > 50% ). Please prove me wrong!!!

It's so easy to refer to a correct prediction Tweet you made (ignoring all the other ones that didn't play out so nicely), and it's so alarmingly effective in convincing people that you're the prophet everybody's waiting for.

And all those ridiculous technical analysis patterns that are repainted hourly because, well, 'resistance didn't hold so we're know seeing ...'

So what I'd like to see from any 'serious' predictor is statistics on all their predictions and how they fared. Got significantly over '50%' right over an extended period of time. Let me know :-)

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I have yet to see a single person/system that can consistently predict cryptos better than random guesses ( > 50% )

To answer this question you would need to define consistently. Without doubt you will find a lot of "prophets" who repeatedly were right in the context of 50% predictions (i.e. market goes up or down OR the resistance at xy will hold or break). This is just a matter of having enough people participating in this prediction business. Those who were repeatedly right obviously receive the higher coverage and thus attention by market participants.

Take Paul, the Kraken for example. 8 correct bets in a row. Well, if Paul would have been wrong with bet No. 8, all the fame would have been fallen on Karl, the Duck with let's say 7 winning bets. Assuming that there were thousands of these kind of oracles at the beginning of this soccer championship makes it not too unusual that one emerged with this winning streak of 8.

Having said that, I do believe that there are traders out there, who do have identified an edge that they are able to exploit consistently. However, would they be willing to talk about it? Certainly not. If you make a real edge public it will be flattened out by market participants almost immediately. Which trader would want that.

And all those ridiculous technical analysis patterns

Can such an edge be based on TA? I absolutely believe so. Take the current 6k resistance for BTC. It has been tested four times now making it a robust resistance for those who believe in TA. Could this chart pattern result from a pure random walk, too? Absolutely! The only relevant question is, are there enough market participants who orient their actions on TA. If that is the case you can potentially benefit from the corresponding behavioural knowledge without the need of a genuine belief in TA.

(EDIT: Crypto markets are actually a bad example to make my point. In order to benefit from the TA-adherence of others, the markets need to have high volume and a require a very high number of relevant participants. e.g like in Forex. Until now, Crypto markets are heavily influenced by the behaviour of relatively few individuals, making TA considerations futile (in my opinion).

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Thanks for your very extensive reply. I can see your points and I can also see that my 'prediction critique' was a bit exaggerated. There might very well be 'some edge' as TA could easily become a self-fulfilling prophecy, but 99% of 'prediction posts' really seem like random nonsense ;)

@mcsvi Are you sure about this information??