Presentation Title

Bitcoin Bouncing Back? Is it Fractal, Fibonacci, or Freaking Gravity?

Faculty Mentor

T. L. Brink

Start Date

23-11-2019 11:00 AM

End Date

23-11-2019 11:15 AM

Location

Markstein 301

Session

oral 2

Type of Presentation

Oral Talk

Subject Area

interdisciplinary

Abstract

Does the value or volume of Bitcoin follow a mathematical model which would enable us to predict its course? Compared to other investment vehicles, cryptocurrencies (e.g., Bitcoin) not only lack the guaranteed future income stream of stocks and bonds and the physical presence of commodities, but also lack a government guarantee of future value. There are various models for predicting future asset appreciation with investments involving known income streams (i.e., net present value) but such models have been lacking for cryptocurrencies. This study represents an attempt to examine the appropriateness of several metaphors and how they might yield useful models of asset appreciation relating to cryptocurrencies. The “gravity” model and the “Fibonacci” models assume accelerating exponential growth without ever reversing into a decline. A better fit would be the “fractal” model which describes an increasing rate of growth, alternating with a series of rapid declines. Such a model is better approximated by logarithmic growth (overlaid in cyclical patterns) rather than linear or exponential growth. Now that a theoretical model has been identified, future research can be conducted in order to provide the confirmatory evidence in the form of time series econometric data.

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Nov 23rd, 11:00 AM Nov 23rd, 11:15 AM

Bitcoin Bouncing Back? Is it Fractal, Fibonacci, or Freaking Gravity?

Markstein 301

Does the value or volume of Bitcoin follow a mathematical model which would enable us to predict its course? Compared to other investment vehicles, cryptocurrencies (e.g., Bitcoin) not only lack the guaranteed future income stream of stocks and bonds and the physical presence of commodities, but also lack a government guarantee of future value. There are various models for predicting future asset appreciation with investments involving known income streams (i.e., net present value) but such models have been lacking for cryptocurrencies. This study represents an attempt to examine the appropriateness of several metaphors and how they might yield useful models of asset appreciation relating to cryptocurrencies. The “gravity” model and the “Fibonacci” models assume accelerating exponential growth without ever reversing into a decline. A better fit would be the “fractal” model which describes an increasing rate of growth, alternating with a series of rapid declines. Such a model is better approximated by logarithmic growth (overlaid in cyclical patterns) rather than linear or exponential growth. Now that a theoretical model has been identified, future research can be conducted in order to provide the confirmatory evidence in the form of time series econometric data.