Bitcoin’s Unpredictability: BTC Doesn’t Move like Stocks or Other Assets

Bitcoin has just been around in the last ten years. And over those years, we’ve seen how it was able to reach near $20K level in 2017. But apart from its meteoric rise, we’ve seen its corrections and how many investors are baffled by its movement.

Over the years, there were a lot of crypto “experts” giving their own predictions regarding the movement of the crypto market. Tom Lee, for instance, in 2018 mentioned that Bitcoin was going to surpass its all-time high. Up to this day, it still hasn’t happened.

Unpredictability Confirmed?

For Zak Selbert who is the chief executive of Indexica, he mentioned that “We tested Bitcoin and other major cryptocurrencies including Ethereum and Bitcoin Cash in the same way we’ve tested popular stocks and traditional currencies”. He added that “From our extensive research, and we’ve done more testing around Bitcoin and cryptocurrencies than we have for pretty much any other asset we’ve analyzed, it simply appears that Bitcoin price and crypto markets just don’t respond as we would expect them to”.

Indexica found out that unlike stocks and other traditional assets that move based on government policy changes and company announcements, Bitcoin and crypto prices don’t exactly work this way. And one of the reasons behind this is that the crypto market is still quite young to be determined which causes the price movements of the market.

For Mati Greenspan who works for eToro, he said that “As we’re dealing with an emerging asset class, crypto evaluation metrics are still largely being developed”. He also mentioned that “Stocks, bonds, currencies, and commodities all have decades if not centuries of price discovery, so analysts more or less know what to expect”. Greenspan added that “The crypto market has only begun to mature in the last two years, so we don’t have any of that. What does work well for crypto analysts are simple technical analysis tools like support and resistance points, especially psychological barriers, as well as sentiment, trend, and above all momentum indicators”.

Market Slowly Maturing?

In 2017, we’ve seen the Wild West nature of the crypto market. In fact, this was also the reason why Bitcoin dropped by almost 90% after 12 months or so. However, the good news is that regulations are slowly taking place.

The US Securities and Exchange Commission is going after ICO scams that have been responsible for giving the market a bad name. In 2017, one of the main reasons why Bitcoin was able to reach near $20K valuation was due to the number of companies that opted towards ICOs.

In addition to this, there are bills that aim towards providing regulatory clarity for the industry. You have lawmakers that are looking to clarify how cryptocurrencies should be classified.

Does it mean that we are going to see more institutional investors at play this time around? After 2017, many were saying that institutional investors will play a role in the market. And this is already happening slowly. You have the likes of JP Morgan realizing the potential of blockchain. Can we see Bitcoin price go back up this time around?