Cryptocurrency price trends reveal timing and central bank impact
Research on the Price Prediction Algorithms of Major Cryptocurrencies and a Basic Transaction Framework
Computational Engineering, Finance, and ScienceComputer Science and Game Theory
Summary
This research studied how Bitcoin and Ethereum prices move over time and found that their weekly price patterns are quite similar. The authors cleaned up the price data and identified regular patterns in how prices change, helping to pinpoint the best times to buy or sell. They also suggested that when central bank digital currencies become widely used, investors might start selling cryptocurrencies. Additionally, they proposed a new way to measure daily price changes that fits better with crypto trading, and they designed a safer arbitrage trading strategy.
What this means in practice
- •For crypto traders: Use observed price pattern periodicity and momentum prices to time buy and sell decisions more accurately in 24/7 crypto markets.
- •For financial data analysts: Analyze crypto prices with new momentum opening/closing prices to model market trends more precisely and design improved arbitrage strategies.
Authors
Shengjian Chen
Abstract
Through long-term observation and time series analysis of Bitcoin and Ethereum, we found the similarity in long-term consistent price trends, especially in the weekly K-line. We denoised and smoothed the historical data of their prices, and further derived the periodicity of their price change trends and the timing of buying and selling. We have for the first time proposed that the full application of central bank digital currencies (CBDC) is a key signal for investors to reduce their holdings of cryptocurrencies or even exit the market. In addition, we proposed momentum opening/closing prices to replace the traditional nominal opening/closing prices to accurately describe the price trends of the 24/7 financial trading market. We found that the cryptocurrency market can be regarded as a relatively independent financial market, thereby designing a safer and more efficient arbitrage strategy.