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Proper Bitcoin Price Analysis: Introduction to USD to BTC Valuation

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Bitcoin Price analysis is a growing practice in the Bitcoin community. Price analysis in general is the practice of examining changes in the markets and their broad implications for the value of a certain asset; we are concerned with conducting analysis on the Bitcoin price, obviously. If conducted properly, price analysis can be a very valuable economic tool for not only the Bitcoin community, but cryptocurrency in general. With proper Bitcoin price analysis, we can determine why prices are rising or falling, what the extent of the rise or fall in prices will be, whether Bitcoin mining is worth it at this time, and we can provide valuable information that Bitcoin users can take into consideration when making Bitcoin investment decisions.

However, the prevailing theme in the Bitcoin price analysis community is one of positivism and what is called “technical analysis.” This type of analysis uses all sorts of empirical models that trend analysts use in the stock markets. They run data through equations and extend trend lines far into the future based on the results of their empirical tests. And their conclusions are pretty much always wrong. It truly amazes me how people who conduct this kind of price analysis can be wrong every single time they make a prediction—and they make predictions very often—without becoming discouraged. Time and time again the real world markets prove their positivist, Neo-Keynesian methodology wrong, but they continue on with these bogus “analyses” without doing anything differently.

Why Proper Bitcoin Price Analysis is Important

I began conducting Bitcoin price analysis using the Austrian methodology of economic analysis after I wrote an OP-ED article that talked about the misguided methodology most Bitcoin “analysts” use. What really inspired me to start conducting analysis in the Austrian tradition was one trend analysis, in particular, that I read on a Bitcoin news website. This particular author isolated three days of Bitcoin exchange activity, ignored all the other data, drew an arbitrary trend line, and announced to his readers that a Bitcoin price crash was well under way and that we could expect it to bottom out at $400. He recommended that his readers sell everything they have and buy back in at the $400 price floor to reap substantial profits. At the bottom of his article he had a disclaimer; this author was heavily invested in Bitcoin. So it was no wonder why he adopted such sloppy methodology, and used it to practically implore his readers to sell everything they had! He wanted the price to fall to $400 so he could profit from the arbitrage.

By Eisfbnore [CC BY 3.0], via Wikimedia Commons
By Eisfbnore [CC BY 3.0], via Wikimedia Commons
That particular instance is what inspired me to write that OP-ED. In my article, I explained why these positivist economic doctrines were worthless for Bitcoin price analysis, and economics in general. After I outlined the largest flaws present in the most popular method of Bitcoin price analysis and predictions of future price trends and trajectories, I offered a prediction of my own that was formulated using Austrian economic methodology. And it ended up being an extremely accurate prediction. I then set out to provide quality, accurate Bitcoin price analyses and solid predictions on where the Bitcoin price was heading. I have been regularly doing price analysis for close to a month now, and all of my specific predictions have been highly accurate; the level of success and accuracy of my analyses has not been present in any of the other, positivist Bitcoin price analyses I have ever seen.

Since I have experienced a great degree of success in my analyses and predictions, I thought it would be a good idea to construct a guide on how I conduct Bitcoin price analysis in the Austrian tradition. It really is a very simple process and, as my articles have shown, it produces far more useful information than the myriad of “technical” analyses that use statistical models, arrogantly named market indicators, and empirically generated trend lines that paint very inaccurate forecasts for the future of the Bitcoin price. Below, you will find a general outline of what kinds of information you can expect to learn in this multi-part guide on conducting Bitcoin price analysis in the Austrian tradition.


Bitcoin Price Analysis: Outline

Each part of the guide will be focused on one particular aspect of using Austrian economics to examine the Bitcoin price and determine where it will most likely go in the immediate future:

Part 1: The Austrian Methodology and its Importance in Economics, Specifically Related to Bitcoin Price.

This first part will cover the Austrian approach to studying economics. In this article, we will examine the differences between the praxeological (Austrian) and positivist (Keynesian) approaches to economics and why taking the praxeological approach yields much more reliable information than the latter.

Part 2: How to Identify Trends and What Kinds of Bitcoin Price-Altering News You Should Look for

The second part in this series will explain how to identify trends and when they are broken, the differences in the different kinds of trends, price floors, and what kinds of news affects Bitcoin’s price, and how. We will also look at why all of the confusing, time consuming empirical models the positivists use are unnecessary and even detrimental to the analytic process.

Part 3: Maintaining Professionalism, and Conducting Honest Bitcoin Price Analysis

The third and final part of this series will back away from economics and will instead discuss the importance of maintaining professionalism and honesty when conducting Bitcoin price analysis that will be presented to the public. We should not attempt to persuade our fellow community members to act in a way that would benefit ourselves. We should provide our analyses according to the methods that will be explained in the first two parts and present them as raw data for individuals to interpret however they want. We are not tasked with directing future human action, but rather interpreting past action so that individuals may make their own future decisions.

Coin Brief is an open source website for digital news. It provides cryptocurrency tools, mining calculators, tutorials, and more. It was acquired by 99Bitcoins on September 2015.

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2 comments on “Proper Bitcoin Price Analysis: Introduction to USD to BTC Valuation”

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  1. bitcoin price analysis is alot like Forex. I recomend to check Fundamental and Technical analysis there

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