With a joy in my heart, I must confess that since the cryptoacademy has resumed, I have been learning a lot which today I an here again to make a submission for professor @stream4u post which is below

What Is Price Forecasting?

Forecasting refers to the process of making predictions based on the analysis of the past and current data.

Price forecasting is a method of predicting the price of a service or commodity by evaluating the various factors regarding it such as its characteristics, current demand, seasonal trends (if any), current supply etc.

IMPORTANCE OF PRICE FORECASTING

Though no body can accurately predict anything, with the help of historical and current data, we are able to come close to the real thing.

Price forcasting is important because;

1. It allows people to have expectations and set due goals based on the data analysis given.

2. Accurate price forecasting helps one anticipate the changes within the market.

3. Accurate and effective price forecasting helps predict when the necessary price increase or decrease may affect the supply or demand of a product.

4. The financial and operational decisions of businesses are based on price forecasting.

PRICE FORECASTING METHOD

There are four main types of price forecasting methods.

These methods are used by financial analysts to predict future expenses, revenues, and the capital costs for a business.

1. The Straight-Line Method;

This is one of the simplest forecasting methods that uses historical figures and trends to predict future revenue growth.

2. The Moving Averages;

These are a smoothing techniques that look at the underlying pattern of a historical data to predict future values. The most common types of moving averages used are the 3-month and 5-month moving averages.

3. Simple Linear Regression;

This analysis is widely used for analyzing the relationship between variables for prediction purposes.

4. Multiple Linear Regression;

This analysis is widely used for analyzing the relationship between multiple variables for prediction purposes.

HOW TO FORECAST THE PRICE OF A CRYPTOCURRENCY

Just incase you have no idea of what a cryptocurrency really is and you don’t wish to stop reading this awesome article to go and find out, a brief explanation of cryptocurrency is coming right up!

Cryptocurrency is basically a decentralized virtual currency. What this means is that cryptocurrency is not a physical currency like the dollar bills, Euros, Pounds etc (fiat) but it is money nonetheless and can be used for buying and selling of goods and services. Decentralization simply means that it is not under the control of any government or bank.

In this digital era, cryptocurrencies are fast becoming a rivals to the traditional currencies of the world. So, I guess you can say that cryptocurrencies are pretty big deals right now.

Like any other asset, the price of cryptocurrencies are determined by supply and demand. Cryptocurrencies are highly volatile because their values vary due to their decentralized nature, therefore you cannot make accurate predictions but with the right models and tools, you can make a calculated guess.

The price of a cryptocurrency is also determined by the number of whales (number of individual addresses containing over 1000 bitcoins in it) and the popularity of the coin. It is a fact that when a cryptocurrency is being talked about by most people, the hype becomes so real that its price increases.

The price of a cryptocurrency can be predicted with the use of technical analysis (prediction of future price movements based on historical data) and chain analysis.

While trade analysis is basically what we have been talking about, chain analysis is a different ball game.

Chain analysis refers to the use of blockchain technology (Public ledger) to predict the price of a bitcoin. This gives you insight to the market as a whole because you have unrestricted access and can inspect every account connected to the public ledger to see the cryptocurrency activity knowing the total demand and supply of that coin, i.e how much coin is being sold, traded or held.

One of the most popular tools to use chain analysis is called glassnode. Glassnode supports the major cryptocurrencies such as the Bitcoin and Ethereum.

HOW TO PREDICT BITCOIN USING GLASSNODE

With the help of the Net Unrealized Profit/Loss indicator, known as NUPL, the total number of profit and loss of the entire Bitcoin supply can be determined. Using the NUPL chart, you will know when the Bitcoin price hits a resistance and begin to reverse.

The total number of whales are important in making a prediction because they could affect the movement of price and even single handedly move the price direction. They could also hint you on the direction the Bitcoin will take so you could predict it better.

The glassnode offers you access to the number of whales. When the number of whales increase, this tells you that the people are accumulating Bitcoins with the expectation that Bitcoin will get higher, so you know what to expect as well and how to predict. When the number of whales decrease, it tells us that the people are selling their coins anticipating a decrease in the market value of the Bitcoin.

PLATFORMS THAT PREDICT THE PRICE OF CRYPTOCURRENCY

There are various platforms for cryptocurrency price pedictions, these platforms do the necessary work and make the necessary research in order to get to their prices thereby making it easy for people to get the predictions they need without actually doing any of the work.

It is always advisable to view multiple platforms before coming to your conclusion and not solely depending on just one platform. Examples of these platforms are; Walletinvestor, Tradingbeasts, Gov.Capital, CoinGecko, Longforecast etc.

HOW TO USE A PRICE CHART TO PREDICT BITCOIN PRICE FROM A PREDICTION PLATFORM

We will be using CoinGecko for instance, as earlier stated, the platform makes it easy for predictions to be made. With the use of the graph provided by the platform you can see where price had been in the past and where price currently is which would help you to predict where price will be in the future.

Viewing a 14d (fourteen day) time graph, you can clearly see that the price of the Bitcoin is at its lowest and on its way coming up. It is safe to say that the price of Bitcoin will be at $ 67,000 in a month atleast.