Statistical Analysis Reveals Ties That Bind the Cryptocurrency Markets
HomeCryptocurrency NewsCryptocurrencies Latest News

Statistical Analysis Reveals Ties That Bind the Cryptocurrency Markets

Predicting the price movements of cryptocurrencies is a dark art that combines technical and fundamental analysis with an understanding of ...

The Bitcoin Misery Index: Finding An Entry Way With Sadness
Ant Creek: Is Bitmain Quietly Developing a Mining Facility in the US?
Lil Windex Might Have 99 Problems, BCH Ain’t One

Predicting the price movements of cryptocurrencies is a dark art that combines technical and fundamental analysis with an understanding of human psychology. A recent analysis dispels a little of that darkness by revealing the interdependence of altcoins. Its findings? When altcoins fall, they often fall in unison.

Also read: Peter Thiel, Bitcoin Astronaut, Moves Markets with Crypto Moonshot

Applying Math to the Crypto Markets

Statistical Analysis Reveals the Ties That Bind Cryptocurrency MarketsTraders are well aware of the effect bitcoin’s movements have on the cryptocurrency markets. The price of bitcoin rises and falls like the tide, with altcoins the sand upon the shore. While the tide’s out and bitcoin is low, alts consolidate. Then bitcoin gathers momentum and comes charging back towards the shore. Every new all-time-high crashes further up the beach, displacing the sand as it lands. Alts get sucked down by the surf, before crashing back onto the beach, higher than when they first started.

Analogies are all well and good, but they’re of little use when it comes to formulating an effective trading strategy. Mathematician Monika Monstvilaite has undertaken a more scientific approach to understanding the markets, explaining:

I felt that there is a need for statistical analysis in the field of cryptocurrencies. There are a lot of predictions out there on the internet, unfortunately theories used in many cases have no statistical evidence.

In “Statistical analysis of cryptocurrencies using actual math” she explores the relationship between different cryptocurrencies. Ms Monstvilaite uses Kendall’s τ, a coefficient for measuring the association between two measured quantities. The tree graph she’s produced shows the link between various cryptocurrencies and the extent to which the movement of one can influence the other.

Statistical Analysis Reveals the Ties That Bind Cryptocurrency Markets

The key takeaway from her analysis? “Most cryptocurrencies are dependent when they perform badly, but relatively independent when they do well. In other words they are likely to “crash” at the same time, on the other hand they tend to increase independently.”

This won’t be revelatory to anyone who’s familiar with the markets; when bitcoin surges, red candles across the board are commonplace, as alts struggle to keep pace. Having this confirmed by mathematical analysis may help when it comes to spotting the warning signs that altcoins are about to take a tumble. She concludes by speaking of the asymmetric nature of cryptocurrency markets, warning: “Even with a diversified portfolio there is a risk of losing a relatively high proportion of your investment even during a time period as short as one day.”

Do you think altcoin prices are heavily dependent upon one another? Let us know in the comments section below.


Images courtesy of Shutterstock, and Monika Monstvilaite.


Bitcoin Games is a provably fair gaming site with 99% or better expected returns. Try it out here.

The post Statistical Analysis Reveals Ties That Bind the Cryptocurrency Markets appeared first on Bitcoin News.



from Bitcoin News http://ift.tt/2lTJcMj
Name

Bitcoin News,5117,Bitcoinist.com,4741,Cryptocurrencies,4741,Cryptocurrencies Latest News,5117,Cryptocurrency Latest News,4741,Cryptocurrency News,9858,
ltr
item
Cryptocurrency Latest News: Statistical Analysis Reveals Ties That Bind the Cryptocurrency Markets
Statistical Analysis Reveals Ties That Bind the Cryptocurrency Markets
http://ift.tt/2Cz6cKz
Cryptocurrency Latest News
http://cryptocurrencylatest.blogspot.com/2018/01/statistical-analysis-reveals-ties-that.html
http://cryptocurrencylatest.blogspot.com/
http://cryptocurrencylatest.blogspot.com/
http://cryptocurrencylatest.blogspot.com/2018/01/statistical-analysis-reveals-ties-that.html
true
1236144943044321696
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy