How To Predict A Bitcoin Crash

predict bitcoin crash
For years, hedge funds and institutional investors have been using sophisticated algorithms to identify price patterns and trade ideas in the securities markets, and perhaps today they’re doing the same for cryptocurrencies.

All the while, the everyday retail investor has largely been left behind.

But that’s changing by the day. Companies are starting to roll out retail-friendly A.I. tools to identify patterns and generate trade ideas. A company in California called Tickeron has a “Pattern Search Engine” tool that does just that, and on January 17, 2018 it’s A.I. confirmed a “Broadening Bottom Pattern” for Bitcoin with dire predictions for its price. Given Bitcoin’s powerful rise over the previous year, it was a undoubtedly a bold and difficult-to-believe claim:

Tickeron’s Artificial Intelligence was predicting a -40.53% crash.

At the time of the prediction, Bitcoin (BTC.X) was trading at a little over $11,000, but according to the AI’s forecast it believed with 88.78% confidence that the price was set to plunge below $6,000.

What happened next is astonishing:

  • BTC.X ‘breakout price’ set by AI on January 17: $11,491 (reached on January 18)
  • BTC.X price on February 5: $6,914

On a price basis, that marks a 39% decline, meaning the AI’s forecast was remarkably close to being on target. To note, the AI never makes any predictions with certainty, but calling for this Bitcoin crash is a significant indicator of the AI’s potential.

Here’s how the prediction was displayed at the time of inception. You can see the breakout price, target price, and an image of the “Broadening Bottom Pattern” in the chart:

For investors who are new to pattern trading, a Broadening Bottom pattern forms when a security’s price progressively makes higher highs (2 and 4 in the Bitcoin chart) and lower lows (1, 3, 5), creating two widening trend lines. The price is expected to move up or down past the pattern depending on which line is broken first — in this case, the lower boundary.

For investors who are subscribed to Tickeron’s AI-powered Pattern Search Engine and received an alert of this Broadening Bottom pattern for Bitcoin, there could have been a few trading options. One option might have been to sell Bitcoin and buy it back at a lower price — assuming the trader believed the declines would be significant but also temporary. Another possibility would have been to purchase a put option on Bitcoin at the time of the AI’s prediction, when the price was still high.

Adding A.I. as a Tool in Your Investment Toolbox

One of the only certainties of investing in stocks, bonds, forex, cryptocurrency, or any other type of security is that there is no certainty when it comes to future price movements. Making an investment decision about a trade or a strategy can involve all the data and research in the world, but there still remains an element of chance, and ultimately, luck.

But that does not mean it’s a waste of time to perform diligent research and homework, and to use all of the tools at your disposal in an effort to make informed, smart decisions. More data generally leads to greater conviction, which can also also lead to a higher probability of success.

That’s where Artificial Intelligence comes in.

It is a very new tool that until now has not been available on a broad basis to retail investors. The A.I. mentioned in this article can be found on Tickeron.com, and it offers investors a free trial. Tickeron’s idea is to provide retail investors with technology and tools to enable trading with massive amounts of data and analysis.

The end result is arming retail investors with a high-powered, virtual research assistant: Tickeron’s Artificial Intelligence. Readers can check out the free trial here: Pattern Search Engine

To note: the information in this post does not constitute investment advice, and Tickeron has no recommendation for Bitcoin or any other cryptocurrency. Investing in cryptocurrencies involves risk of total loss.

 


Page Updated: June 11, 2018

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