The paper's authors, economics professor Aleh Tsyvinski and economics Ph.D. candidate Yukun Liu, sought to "formulate and investigate potential predictors for cryptocurrency returns," according to the paper, and analyzed years worth of past price data for Bitcoin, Ripple and Ethereum. (The prices studied for bitcoin span from 2011 to 2018, while Ripple's XRP and Ethereum's ether data begins at the newer currencies' inceptions in 2012 and 2015.)
Historical data is not a guarantee for an investment's future performance, and Tsyvinski and Liu aren't giving financial advice, but their research reveals two factors that can be meaningful pricing tools for predicting bitcoin's next move.
1. The "momentum effect"
The first significant factor is momentum: The report found that if the price of bitcoin increased sharply over a week, it would be likely to continue to increase for the following week, Tsyvinsky tells CNBC Make It.
2. The "investor attention effect"
Second, Tsyvinsky and Liu found the amount of interest and hype around cryptocurrencies, measured by investors searching and posting online, was a significant predictor of price movements.
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