Intro
November has been one of the worst months in the crypto history. Ironically, November usually has been good month for the crypto prices. But not this time. Bitcoin has fallen to a 3800 level and all the other altcoins have followed as well. STEEM included.
It is funny to watch how all the industry follows bitcoin. All the alt prices are pegged to Bitcoin at the moment. Even if there are fantastic projects, that are gathering a big number of users, if Bitcoins goes down, everything goes down with him. This is just how things are in the crypto world at the moment. The price doesn’t reflect the actual situation. That is how it goes in young and still not enough developed markets. We will need to wait at least a decade to see a fully mature market.
I’m doing this analysis every month, and I had some doubts should I do it this month as well. There is not a lot of motivation to do it. And seeing the crypto prices so volatile, one can ask him self does statistics have anything to do with it. Are this statistical analysis relevant at all. Short term analysis probably not. The long term on the other hand can give a big picture on what is going on.
So how does this terrible month, and drop in price of Bitcoin, influenced the long term outcome. Let’s find out.
There is a lot of analysis on the price on bitcoin and every other crypto, focusing on day to day price.
This post is not about that. I don’t believe in short term analysis and get rich quick schemes. Even if some people achieve to get rich in a quick way, at the end they will lose it fast as well. Easy comes, easy goes.
Last month BTC performance – October 2018
First lets see how the last month went. Here is the chart of the Bitcoin price in November 2018.
screenshot taken from my excel file
Bitcoin has entered November with a value of approximately 6300 USD, following the stable price period from the previous month. That stability wasn’t meant to last, and everybody was expecting a move. That move happened exactly in the middle of the month, but unfortunately in a bad direction.
On 15th of November the Bitcoin price dropped from 6300 to around 5700! A 10% drop in a day. The next couple of days there was some side movements and then on 20th of November another sharp drop, below 5000. This drop continued in the next couple of days and touch the bottom on 27th of November with a value around 3700. The next days there was a bounce and Bitcoin finished the month with a value of 4200.
Quite a ride 😊.
Five Years Trendline
When adding this month to the 5 years data, calculate the trendline, the chart looks like this.
screenshot taken from my excel file
Even with the big drop in price from the last month, the long term trendline is still in a upper direction. Well this is encouraging.
Now let’s make some forecast.
screenshot taken from my excel file
Since statistic is not an accurate thing, but averages, here are the tree numbers for the Bitcoin range for the ending of the next year, on 01.12.2019:
- Pessimistic – 4431
- Average – 8692
- Optimistic 13123
For the entire next year the price range is between 3600 and 13000. If we go by statistic, this means that we are near the bottom.
Just to make it clear.
I do not provide personal investment advice and I am not a qualified licensed investment advisor. This is simple statistics.
One of the values that represent the accuracy of the model is R-Squared (Coefficient of determination). R squared", is the proportion of the variance in the dependent variable that is predictable from the independent variable(s).
In the model above the R Squared value is 0,50. Meaning that, the time as variable, have 50% impact of the final output, the Bitcoin price in our case. This is not a bad value, and overall everything above 50% is good enough.
It also tell us, that the probability for the forecasts based on this data is 50-50 :).
Trend comparison with the previous month
Comparing this month with the previous month, for which I also made this type of analysis, the trend is showing a very slight decrease.
I was thinking that this big drop will have a big effect on the price, but obviously not.
screenshot taken from my excel file
In general, the forecasted prices remains almost the same. One month of bumps doesn’t change the price in a long term.
Conclusion and some thoughts of the results
Well I find my self surprised a bit from this analysis. I was expecting a bigger drop in the price forecast, following November prices. But that didn’t happen. Statistically Bitcoin is still on his course, and still have slow increasing trendline. Not a crazy bull run.
Probably it will take a long period of low prices to change the trendline. For now, it doesn’t have big effect. Now this is just a representation of probabilities and the accuracy for Bitcoin is around 50%. So, it is a 50 – 50 chance for this scenario.
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