Jumping on and off the price wave of cryptocurrencies with perfect timing so you can buy the lows and sell the highs. That is what we all want right? But when trading you will soon notice that its not that easy. In the beginning you got lucky a few times but now see your first losses. Ough! Thats real money!
Whoever bought crypto just after Christmas started the new year with a big smile. The only way was up. As prices get stable again also the trading gets harder. You have to pick the right coins at the right time to bring you profit.
But how? When you go to tradingview.com and select a random “altcoin” you are overwhelmed with technical analysis “tradingview ideas” posted by users. Fibonacci retracement, RSI levels and of course the always reliable MACD. Its a good start to get insight in price development. And those tradingview ideas are good entertainment too because in most cases the conclusion is that the coin will go up 🙂 What of course is not the case.
The reality is that technical analysis gives you a good understanding of the current and past situation but it has very limited prediction value. None of the TA metrics have scientifically proven predictive insight.
As all traders together “create” the price basically, so we must be able to capture that sentiment and translate it to a realtime 30 minutes, one hour or even one week prediction.
Polarity is where it all begins. This is supply and demand 101. We talk about momentum and we talk about trends. When we look at support and resistant levels, what makes it goes through those levels? I call it trend momentum as on a large scale as we all are connected as we gather information about a coin and convert that information into buying orders on the exchanges.
Twitter is one of the main drivers of this force. In our research we created this normalized plot. We see some polarity but for the naked eye hard to make something from it. However, a well trained deepnet can cherry pick from the enormous flow of data that comes from the streaming Twitter API and predict the trend of price evolvement.
NC State has a cool app online where you can live check sentiment for any cryptocurrency. Check it out.
This week I red a blog (I forgot from who) and this guy had a nice comparison of this crypto hype and the Japanese real estate bubble in the late 80’s. Apparently the Imperial Palace in Tokyo had the same valuation as the entire state of California.
So I guess the point is that profit from this current crypto madness while you can!
Any comments or questions? Leave a reply!