Bitcoin In A Year - Analysis Of Reddit Predictions

Every year for the last 7 years user BlackSpidy runs a contest to predict bitcoin price year in advance. More than predicting, the forecasts reveal sentiment and general mood of the forum about bitcoin as I will demonstrate below. While the very first year of the contest started in December 2013 yielded too few predictions, 2014 and on had enough data to be parsed.

2014 was the year of Mt Gox failure, and rumors of bitcoin ban in China, and BTC crashed from 850 to 325, finishing the year around 378 . Reddit readers predicted a median price of 700 for the end of 2015.

2015 was a slow year for BTC, trading between 225 and 350, and finishing the year at 362 . The end of the year rally inspired readers to forecast the median price of 650.

2016 was a bullish year for BTC, when it doubled over year, finishing at 753 . Sentiment was highly positive and readers predicted 1270 for the next year.

2017 was obviously a gear year for bitcoin, when it grew 9x, finishing the year at 10,859 . Excitement about the possibilities was so high that median forecast for the next year was 51,000 and even 1st quintile of the forecasts was over 26,800 . Of course looking back these numbers were never realized, not even close.

2018 was a bearish year, with prices falling to the year end value of 4,165 . Reddit readers were predicting the doubling of the price since the lows for the year end of 8,350, which is not radically far from the 7,200 where we are about now.

Obviously 2019 was a good year for BTC, but the price still has not fully recovered. Oscillations around 10k level were quite wild, and in my opinion inspired more enthusiasm for the currency. Readers are predicting 2020 price of 17,110 , more than 2x of current price.

Given the positive bias of every annual prediction - that is redditors predict 2 times the current price, and about break-even realizations of the forecast, it is hard to make a concrete conclusion. Will bitcoin indeed stabilize above 10k next year, or will the market trade up and down around 10k level?

Whatever your opinion is, I suggest you check out Deribit exchange - currently the most liquid BTC and ETH options market. Merry Christmas and good luck with your trading!

Over the last few years I have been working more and more with NLP (natural language processing), a branch of AI focused on processing of text data, information extraction, figuring out relationships between different entities, etc. If you are interested in working on project processing your proprietary data into signals, or extracting information from public or government publications, send me an email.

Throw Away Your Skew Model : BTC at 10K

BTC is about to break into 10K territory - or already did on some exchange by the time I finish this post  - the level we have not seen in over a year. As we approach this round number we will observe the usual phenomenon of price clustering around this level, as key psychological level switches from support to resistance.

I typically do not pay significant attention to technical indicators, however this one is really different. Price clustering around key powers of 10 - like hundreds, thousands, or 10 thousands have been observed and well studied. While I do not know how will this impact spot returns, I can certainly say that it will have significant effect on the distribution of prices, and for option traders this means skew.

I expect skew behave quite different than it was before around this level, as trades will primarily focus on the price, as opposed to return / vol covariance, or other skew factors. If you're currently an options market maker - this will get tricky. And if you are a trader of options I expect there will be many interesting opportunities in the coming week or two.

If you're interested in trading BTC or ETH options there is only one exchange that I will recommend - Deribit.