Bitcoin Price Probability

in LeoFinance3 months ago

They calculated the odds of everything and understood the possibility of nothing.
Mr. Batnick about LTCM team


Do you know what is the safest vehicle statistics-wise? Somewhere on the internets I was once told that it was...

Escalator (the "traveling staircase", those up/down self-moving steps you see in subway stations, shopping malls, airports, elsewhere).

Long ago I took part in an escalator crash. It wasn't like I fell down the steps because I was too much involved in jerking my smartphone. It was like a huge escalator, a hundred-meter long metal stair inclined at 45 degrees, suddenly went wild completely uncontrollably, the steps started to run down faster and faster, together with all dozens of people who were on the escalator at that moment. It was like riding a crowded brakeless toboggan down from a 45-degree hill -- right into a stone wall below...

Since then I don't trust statistics that much. Later I learned about Mr. Taleb too.

Some time ago I saw an interesting article about a Bitcoin price expectation. Honestly, I don't know the math (let alone probability math) well enough to tell if those calculations are correct or not, so I regard that article more as a math joke. But I think it does have some truth inside.

Also, recently I was asked how probable it would be that BTC would reach 40K again? Well, right now like two-thirds of me believes that we will see $40K again this year. If we fall to $20K, then only half of me will believe in reaching $40K. If we fall to $10K -- only a quarter of me will keep believing.

Of course, to a great extent, my answer was a stupid joke. I don't think that these price probabilities can be calculated that easily. Of course, we can estimate future volatility based on the historic volatility, define the "safe levels" for stop-losses, put our orders so as to limit our possible risk, and so on. These are necessary things. But I also believe in Mr. Taleb's black swans, I believe that improbable shit happens more often than we could expect from probability math. And it's not because our math is wrong, it's because we sometimes rely on it a bit too much.

The "fundamentals" that drive BTC (and other cryptos, for that matter) price are hardly quantifiable. We can calculate open interest, liquidation levels, whales wallets, and so on. But how to quantify hype? How we can estimate what Mr. Musk will twit, SEC will file or Reddit will hype? All these estimates are more like swimming in a pond full of colored swans of all sizes. (Does our old probability math ever work in hyperreality, or we need some new normal math?)

"But why two-thirds of you are sure about the 40K pump, on your estimates of average opinion about the average opinion?", you might ask.

Well, I'd say that so-called "market sentiment" (or hype, if you will) is an important thing in crypto. I'd say it's pretty much its only "fundamental".

However, my reasoning is much more simple, and I've already stated it earlier somewhere. Some guys have bought themselves in BTC pretty deep, and at a relatively high price ($10K-$30K), and partly with other people's money. Now pretty much the only way for them to show profits is to pump the price even further, on average -- and they seem to be able to do it. Alternatively, they should find a real paying "use-case" for their BTCs (but I kinda doubt they're able to do it). Otherwise, they'd better sell their shitpiles right now, write the losses off and find a new toy to play with.

Ok, I can be wrong with my "market sentiment" and similar bullshit. After all, I was wrong many times, and yet many times will. I have no insider info, no connections to the exchange owners, or "whales", "institutions", "influencers", etc., I don't even know the math well. Pretty much I'm a "dumb money". But I also know that when you suddenly find yourself riding a brakeless toboggan into a stone wall, it's kinda hard to comfort yourself that trustworthy statistics says it shouldn't happen.

Posted Using LeoFinance Beta


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