How to Predict Bitcoin Price - Advice From Professional Trader

20.11.2019

Financial markets offer different asset price forecasting methods and the cryptocurrency market is not an exception. So if you want to make a long-term Bitcoin price prediction 2025 and decide whether to hold assets or sell them, this article is definitely worth reading!

 

Statistical prediction method

 

 

The statistical method is probably one of the most popular ways of making a Bitcoin price prediction 2020. A trader or programmed system gathers the maximum quantity of market data and structures it into certain arrays. With the help of a statistical component takes place distribution of system parameters. Having such data it’s possible to calculate mathematical models’ effectiveness.

Sounds like abracadabra? Well, to put it simpler, parameter statistics is collected and the most profitable models are chosen. These models are systemized according to specific features and form trading systems, which are then used by trading experts. Such an approach helps them to make a crypto price predictions and to decide what to do with assets.

If the result starts to deteriorate, it’s necessary to recalculate parameters and to revise working models.

The statistical method of Bitcoin price prediction 2025 allows with the help of a set of parameters to determine which models are working, and which – don’t. Quite often traders mention trading results along with statistics of mathematical models. Every model has its own performance statistics.

Statistical cryptocurrency price prediction method is rather simple. A trader should only have several models and to statistically fixate the results of the work. And then to select parameters for correcting mathematical models to improve performance.

Let’s say you gather data on the moving average or, which is more common, on the intersection of two moving averages. According to statistics, when checking this strategy in a one-year period, the system shows a positive performance with a 50% profit.

However, this evaluation of the model’s work is rather superficial because it’s important to correct parameters. For example, when a 7-day and 14-day moving averages intersect, the result equals 50% but if to change parameters of one of the moving averages on a 21-day, the result may improve on 10%. Changes in the parameters may eventually influence Bitcoin price prediction 2020.

It’s also possible to add a volatility parameter. When it is increased, profitability may also become higher. Thus, when gathering statistics on separate models and combining system parameters it’s possible to make a Bitcoin price prediction today usd or of any other currency.

 

Systematic prediction method

 

 

Basically, all methods predictions can be called systematic because all of them are based on a certain trading system. However, we’d like to distinguish this one because the systematic prediction method includes not only a trading model but also a system of risk and money management.

This method of Bitcoin price prediction 2025 is the most convenient for manual traders. It consists of building certain trading models and of position management. In other words, the overall trading situation also influences the decision. For example, when a trader uses bull triangles breakdowns.

At every breakdown the trader opens a new position. But any decision on the position also depends on the size of the deposit, and current market situation (bear or bull one). Unlike the statistical Bitcoin price prediction 2020, where everything is well-calculated, systematic prediction method takes into account the general image of a trading account, market or cryptocurrency as a whole, and not only realization of a trading model.

Thus, you get a more comprehensive picture of a bitcoin price and can keep an eye on multiple variables.

 

Program prediction method

 

 

If you are a trader, who is also an expert in software development, you’ll definitely like this Bitcoin price prediction 2020 method. Traders-developers create a program that generates mathematical trading models either under their guidance or on its own and then shapes an optimized trading system.

If the first two methods of Bitcoin price prediction 2025 don’t require any side programs, this one is based solely on computer software. There is a huge variety of programs, which create trading models based on market data. These programs include trading robots and algorithms.

Unfortunately, this prediction method can’t be called entirely reliable and profitable because behind any program is a trader or programmer who created it. Program Bitcoin price prediction 2020 method is good in showing an accurate trading result and in highlighting which parameters should be optimized or excluded.

Program Bitcoin price prediction today usd methods also include all sorts of optimizers and statistics collection based not only on parameters and trading models but also on the trading result. For example, during optimization the system may recommend you not to trade at a certain time because statistics show that your trading system usually experienced losses at that period.

Another benefit of this Bitcoin price prediction 2025 method is a high accuracy of results and a rather low probability of making a mistake during calculations.

 

The method of financial indicators analysis

 

 

This method of Bitcoin price prediction 2020 can be attributed to fundamental analysis. Financial indicators of a company are analyzed to detect problems or to make sure that a positive result is reached. When using a financial Bitcoin price prediction chart, mathematical trading models are not taken into account and trading decisions are made based on financial data.

Opening a position can be at a price that this financial model has evaluated as the most optimal for a purchase.

The selling price can also be calculated using the method of financial indicators analysis. Most often this method is applied to traditional financial markets, where profitability, revenue, company growth, and competitiveness are the main criteria of financial asset success.

This method price prediction is not so popular because the majority of created companies are the pioneers of these technologies and there is a high risk of going broke. Remember that the crypto market is a venture capital market.

 

Neural network prediction

 

 

This method of prediction is the newest and thus the most unknown. Many developers and agencies are trying to use this approach but results are still hidden from the general public.

Neural networks can be divided into two types: trader-trained and self-taught. They can also be divided into two classes. The first one predicts price direction. The second class manages trading account and position after getting data on Bitcoin price prediction today usd from the first class.

Today we won’t focus on neural networks because their study requires significant resources. As traders, we are more interested in creating a system ourselves. A system that would accurately predict the direction of the price.

However, before creating such a system it is important to know a few things about the market in general.

 

Things to know to predict Bitcoin price

For a quality price prediction its necessary to start with the basics. One of the cryptocurrency market distinguishing features is that it is rather new and the first crypto asset was Bitcoin.

In 2009 was created an algorithm that allowed getting a digital currency named Bitcoin as a reward for solving simple mathematical tasks. Since it was based on cryptography, it could already be considered a cryptocurrency.

With time the market started expanding by Bitcoin forks. Every year more and more cryptocurrencies emerged. At the moment there are several thousands of assets and coins that can be traded on crypto exchanges. So it’s not surprising that thousands or even millions of people worldwide want to know the most accurate Bitcoin price prediction 2020!

 

The evolution of bitcoin trading

 

 

First things first, you should remember that the crypto market is extremely volatile. When Bitcoin emerged, the market’s conjuncture started changing daily: there are thousands of hundreds of professional participants, and it’s a real challenged to beat them. In addition, there are many derivative instruments, which can impact the price, making Bitcoin price prediction today usd a burning topic!

But let’s get back to 2009 when Bitcoin was rather difficult to sell. There were only a few exchanges, and they couldn’t boast high liquidity. Price fluctuations were sky-high. There were days, when the price could increase on hundreds of percent and then drop the same way. However, the Bitcoin price has never equaled zero and continued to beat new historical highs.

A thing to remember is that every year the cryptocurrency market replenished with new participants that were somehow related to the crypto world: some of them were mining Bitcoin and sold it on exchanges. Others used Bitcoin as an anonymous cryptocurrency for personal matters.

From the day when the crypto market emerged and until 2017, almost 95% of its participants were simple users, who didn’t know anything about trading. However, in 2017 everything changed: once Bitcoin (and other currencies) attracted public attention, the market was flooded with financial experts, who noticed extreme volatility and saw an opportunity to make money.

According to our estimates, around 70% of traders are professional experts and it’s rather challenging to beat them, especially when it comes to price prediction. There are periods, when media sources attract new players and they become victims of those professional traders.

So how to survive on the market? How to make a Bitcoin price prediction 2025 and earn money? The answer is simple – to understand how markets work.

 

Market mechanisms

 

 

Any market, whether it’s a financial or commodity one, is based on the law of demand and supply.  On any exchange, you can see the price offered both by sellers and buyers. If the market is dominated by demand, the price increases. If supply, the price drops. In case the supply equals the demand, the price doesn’t change.

Understanding this mechanism is vital for profitable trade and making crypto predictions. Before deciding whether to buy or sell crypto, you should understand what is predominant on the market and in what state it is in.

If it’s a bull market, selling at recent prices is pointless because it is always possible to sell at a higher price. If it is a bear market, you should sell as fast as you can because the price may drop significantly.

The same applies to buying. On a bull market, it’s better to wait (even though buying at any price on a bull market is not a mistake if you’re not a newbie and have a viable risk and money management system).

Only by understanding mechanisms of the market and exchanges it is possible to make a crypto price prediction and to remain in a winning position.

 

Exchange mechanisms

 

 

Another thing to pay attention to is the quotation of prices. It can hint whether you should buy now or not. Isn’t it another possible instrument for Bitcoin price prediction 2020?

If the price for the purchase is much higher than for selling, this may lead to a rapid burst of the price up. And if the price for selling is higher it may lead to price drop. However, you should be rather attentive - all the data you see about purchases and sales is also seen by other traders. And if there is an obvious disbalance but nothing happens – you should stay alert because something is surely wrong. And your price prediction may be incorrect.

The exchange mechanism involves the purchase or sale of a large market position at any price. You can make money on it if you’re able to react rather quickly. Traders should also pay attention to liquidity, i.e. density of positions on purchase or sale.

If it’s low, most likely the market is weak. The higher the liquidity is, the simpler it is to make an accurate prognosis.

 

Market manipulation

 

 

When making a Bitcoin price prediction 2020 it is impossible to ignore discussions concerning market manipulations.

Inexperienced players of the cryptocurrency world often claim that whales (experienced traders) manipulate the market. They intentionally push the price over a certain limit to collect stop losses. However, we think that such an assumption is misleading.

If any market player decides to manipulate prices, other participants will notice it and the price will return rather quickly. Such manipulation is possible only when the trader creates this market himself. So when making a Bitcoin price prediction 2025 there is no need to worry about manipulations.

Considering that more and more professional traders are entering the market, it’s almost unreal to manipulate the market: too many traders follow the price and notice any suspicious fluctuations.

For sure, such manipulations are possible on some exchanges that allow trading with leverage. But keep in mind that the price always returns to a previous level. So when making a price prediction you surely need to take this into account.

 

Indicators

A significant part in prediction methods is played by certain indicators. In particular, you can pay attention to indicators of short and long positions. If traders have opened too many short positions then you need to be attentive because the price may unexpectedly increase. And vise versa, if many traders are staying on long positions, this will sooner or later cause a rapid price correction.

 

Interaction of participants

The last criterion for making a Bitcoin price prediction 2050 is an analysis of market participants’ interactions. The smaller the trader is, the shorter timeframe he uses for trading. The bigger the trader or the fund is, the larger the timeframe is.

That is why technical analysis shows good results in short timeframes. However, with the appearance of trading robots, technical analysis at short timeframes has changed significantly. It is already quite difficult for a regular trader to compete with algorithms that are able to process bigger amounts of information and can make trading decisions.

 

Conclusion

 

 

Eventually, to make a viable crypto price prediction it is necessary to choose the optimal prediction method. If you are not a professional trader and have some free time to master this occupation, we recommend starting with creating trading models based on technical analysis and then using a statistical approach to define models, which perform best results on a current market.

Another crypto prediction tool is a set of various indicators such as long and short positions. However, you should still keep in mind market mechanisms and mechanics. Don’t forget that you need to compete with many professional traders, funds, and algorithms, which possess bigger amounts of information.

A simpler solution will be to apply a trading algorithm of a trader that has shown good results. In this case, you should demand real trading statistics and not history. It is important to see that the robot is making profits on the market at this particular moment.

And if you are a professional trader, our only advice is to sharpen your trading skills and to constantly adjust to the market which is evolving at a break-neck speed.

The best method of making a Bitcoin price prediction 2030 that gives a 100% result is your own. The method, which you have created based on your experience by trial and error.


 

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