Why cryptocurrency price is not a thing to foretell
Back before the crypto had been invented, and even before the Arabic numerals had been coined, human nature strived to see the future. Either a motive of cognitive desire or a dread of the unknown, but we always will to know what is going to happen ahead of our sight – all thanks to our rational nature.
In the fast-moving world, where the risk and the uncertainty become even more pivotal, we still seek to know the future. And crypto trading is not an exception – but an industry, in which the urge to predict is the part and parcel. As traders, we vigorously rally to predict the price of the asset, and the state of the market, seeing that the stakes are high.
This is where price predictions enter the game. One of the most widespread crypto content, catching the eye with promised fulfillment of our needs and adopted by many analysts and investors on the web.
The price predictions seem credible, but are they indeed? Using the example of a recent Forbes Advisor article, we are diving into knowing more how the price predictions can mislead.
There are two things you can control while trading…
Whitebase Trading – an educational course by WhiteBIT cryptocurrency exchange – outlines a poignant perspective on two things you can control while trading on the market: the losses, and the risks. The latter ones are crucial in the investment, and their importance can be explained by one simple idea: you can’t predict the price or the movement exactly.
Indeed, the various indicators, patterns, and a great bunch of other technicalities may showcase a rather exhaustive data on the asset, but:
- the information received will be limited to a trend or vector with imprecise ranges;
- the trend or movement you seem to foresee can swap in a flinch of eye, given the cryptocurrency volatility.
In fact, there are influencers who tend to operate with the price ranges and key levels to monitor. Understanding the potential responsibility of their followers’ trading, the analysts confine themselves to citing opinions on possible tendencies. Still, not all of the investors’ predictions are brought into life, making their content more of educational aims.
Price predictions are the whole different story. Their main issue lies in their specification. Many analysts, influencers, and even computing models (AMBCrypto, Changelly, etc) focus on foretelling the exact price level that a certain asset may experience. While such price predictions would indicate inaccuracy for the most part, they evoke an even severer backlash – a factual mislead, prevalently supported with a catchy headline for provoking attention.
One of the thousands cases in point: a recent Forbes article, entitled “Bitcoin Price Prediction: Can Bitcoin Reach $1,000,000 by 2025?”. Apart from the bold heading, this article is an essence of all the drawbacks, typical of price predictions.
Well, can Bitcoin reach $1,000,000?
Nikita Tambe, the author of the Forbes piece, indeed managed to cover Bitcoin exhaustively, with a deep scrutiny on fundamentals and technical parameters. But high-end journalism is not what’s interesting to us for now. To obtain a bigger picture, we should dive deeper in its consistency and framework.
By and large, the article cites the compilation of different trader’s thoughts, mixed with an author’s stance. While carrying out the analysis of the factors that spur the interest in Bitcoin, the piece as well heeds the technical predictions by many investors. Two variables are later added to form a conclusion – in this case, the specific Bitcoin price ballpark (in either bullish or bearish outlooks).
At first glance, the piece is set to be the price prediction, seeing that this term is a core of the title. However, the absence of an ultimate outlook and the comparison of contrast points brings us to a conclusion that the article is not about prediction at all.
However, the inaccuracy may not be on the author’s end. There is a chance that there is literally no thing as price prediction. Instead, there are presumptions, certain calculations, potential outlooks – all hinged with obscurity and lacking any factual certitude.
Namely, one of the so-called “prediction” cited in the article clearly proves the aforementioned point:
The Chinese-Canadian Bitcoin entrepreneur and CEO of crypto firm, JAN3, Samson Mow, believes that the cryptocurrency will reach $1 million in the next five years. With several such wild guesses, Balaji Srinivasan, an investor and the former technology chief at Coinbase, took a bet that BTC could reach $10 lakh (1,000,000 in Indian numeral system – a.n.) or more in just 90 days
As of the above, the lack of verification behind the claims is on the face. While such “wild guesses” are a common buzz driver in the crypto community, the pieces of more grounded technical analysis may also result in a slight margin of error. This can be considered as another argument in favor of the “price prediction” term’s fallacy.
Ultimately, the question in the article’s title remained unanswered – we’ll never know whether Bitcoin will cross $1 million. However, we would not receive the insight even if the information was stated on any other media or in any other form. All due to the fact that price predictions do not predict. Instead, they assume, evaluate, or estimate – but mostly, they bet and try to guess, putting investors in great risk.
Hence, always follow the Do Your Own Research rule, and do not stick to the future perspective, but mitigate current risks.