Crypto Forecasts: True or False?

It's a phenomenon familiar to anyone who follows the cryptocurrency industry. A prominent figure - the CEO of a digital currency exchange, a key developer or researcher, a successful cryptocurrency investor—makes a dramatic forecast about the price of Bitcoin?or the general movement of the digital currency sphere.

As is usually?the case in the financial world, sometimes these forecast come to pass. But more often than not, these forecasts never come to fruition. Nonetheless, many analysts and experts continue to make price forecasts for Bitcoin?and other digital currencies, and investors still seem to take heed.

Below, we'll explore why any cryptocurrency investor should take a price forecast with a good degree of skepticism.

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Is there any way to make a reliable crypto price forecast?

The short answer is – yes, to a certain extent.

Modern price forecast rely almost exclusively on artificial intelligence, more specifically – on machine learning models. The main feature of such models is that they can process vast amounts of data quickly and objectively, potentially uncovering patterns that may be challenging for humans to identify.

The quality of a particular AI model and the accuracy of its forecast depend on the two following parameters:

1. How much data is collected.?Price forecast services gather vast amounts of historical price data, trading volumes, market sentiment, news articles, social media activity, and other relevant information. The more data is collected, the more accurate the result is.

The AI models apparently cannot gather all the information about a given coin, especially the data that isn’t public. Even more importantly, no model can predict poor decision-making, an Elon Musk tweet, or a Wall Street collapse – while these factors sometimes have a decisive effect on crypto prices. This is a key limitation for any, even the best, AI models.

2. The quality of the forecast model.?After collecting data, AI models execute the so-called feature extraction: they analyse the data to identify patterns, correlations, and other factors that may influence cryptocurrency prices.

Based on the extracted features, forecast models are created. Then these models are trained using historical data, and their accuracy is evaluated by comparing their forecasts to known outcomes. Once the models are trained and validated, they can generate future price forecasts based on new input data.

As you know well, crypto prices are subject to rapid and substantial fluctuations. Slight changes in market dynamics, investor sentiment, regulatory announcements, or market manipulation can lead to unexpected price movements, making accurate forecasts difficult.

How do I judge the quality of an AI forecasts model?

The more details a price forecast service shares about how its AI model works, the more likely it is that its forecasts are at least not made up.

Meanwhile, the key feature of machine learning is that you cannot clearly identify how exactly a model extracts a given pattern. Even if you know what data it collects and analyses, the only way to judge a forecast model is by evaluating its performance.

The art of flexible confidence

You must have seen the services that give forecasts without specifying how confident their model was about these forecasts. Some platforms even demonstrate hilarious overconfidence by offering forecasts like “Bitcoin will cost $89,756.45 in 5 years and 3 days.”

It’s good when a service offers a probabilistic forecast, allowing us to measure the potential accuracy of the price forecast. For example, when the platform says things like “our model is 76% sure that Bitcoin will cost more than $32,000 by September 1, 2023.”

A trustworthy price forecast tool discloses the forecast history and is open about its model’s performance in the past. Most platforms don’t share information about whether you’d make a profit or a loss if you had used it to make a decision. It is also common that services significantly change their forecasts on a daily basis based on the current market situation.

Nevertheless, some services are not afraid of sharing the ultimate accuracy of their forecasts from the past. Give preference to price forecast tools that tell how much you’d have earned (or lost) if you’d used their forecast in a given month.

What is the problem with long term cryptocurrency forecast?

Easy to Believe

One of the major problems with many price forecasts about is that they lack sufficient analytical support to back up their claims. An outlandish price point, particularly one in the upward direction, is always going to be tempting to investors; someone holding a cryptocurrency currently priced at $100 can easily be swayed to believe that the token will skyrocket to $10,000 simply because they want it to be true and it has happened in the past. However, the issue is that many forecasts are delivered without evidence and proper analysis to support them.

Hype, Not Fundamentals

In many instances, cryptocurrency forecast is overhyped by notable figures, business owners heavily invested in digital assets, or others who have an interest in profiting if prices rise. However, there are no fundamentals behind most cryptocurrencies.

To be fair, there are some bonafide businesses or other entities that have created blockchain solutions. These have tokens that are used for specific purposes on these blockchains, but they tend to make their way onto exchanges in hopes of quick riches. But these blockchain solutions also have a company behind them, possibly with stocks trading on a traditional exchange or over the counter. They'll have assets like equipment, people, and intellectual property that add value.

Investing in these companies may have better results in the long run if they have a blockchain product or service that is truly useful. For example, the banana farm in Loas funded by a cryptocurrency sale, with coins?redeemable in Loatian bananas? Not so useful. A blockchain with a native token designed to increase traditional finance transaction times, cross-border payments, and stability??Possibly useful. A cryptocurrency issued for the sake of being a cryptocurrency and hoping for a return is genuinely worthless.

Stubborn Stances

In many cases, the forecast may come from an "analyst" with a "permabull" stance. These forecasters may turn out to be right—anyone can plot a?trend line?on a graph and make a forecast. Eventually, someone will be right, and they'll be touted as the latest expert to listen to. You've likely seen a headline like "Analyst that predicted a price of XYZ and was right, now forecasts ABC!"—and some will listen.

Some might take an opposing stance, forecasting that the markets will fall to a certain price. There is a chance that it will happen, and that person will be lauded as the one who knows—and again, some will listen.

Speculation

It's true that a significant number of cryptocurrency millionaires are out there who made lots of money from early investments in the space. But this was pure speculation at that point. Even though prices are continually rising over time, like the stock market, Bitcoin and many cryptocurrencies remain?speculative?to this day because they are driven by emotion and desire.

Media and News

Like analysts, many media outlets want to be the ones that "were there" in the trenches with the traders and investors. Being the first to report is a big deal, so when there are whispers or speculation about a development, it is quickly disseminated to the masses. Case in point—in October 2023, an employee at an outlet accidentally published a social media post about a Bitcoin Spot ETF, something many investors, brokerages, and financial management firms have been clamoring for. Bitcoin's price spiked more than $2,000 over several hours before dropping when fans realized it wasn't true, and the outlet released an apology.1

Trading

Critical to prices is volume, and bitcoins are traded at an average of $24 billion per day. Trading activity is guided by price speculation on the part of traders—people using bitcoins in transactions generally don't create any influence on prices because there isn't enough buying volume or enough payments being made to affect demand and supply. So, realistically, analysts use price data influenced by traders and investors to create forecasts.

Best Crypto Forecast Sites

1. WalletInvestor?

WalletInvestor is a popular forecast site tool that uses machine learning algorithms to analyze and forecast?cryptocurrency prices. The site provides daily price forecasts for over 880 cryptocurrencies and offers a long-term forecast for up to five years. WalletInvestor’s projections are based on technical analysis, historical data, and market trends.

2. TradingBeasts

TradingBeasts is another popular cryptocurrency forecast site tool that provides daily price forecasts for various cryptocurrencies. The site offers both short-term and long-term forecasts, and it also includes a range of technical analysis tools that?crypto investors?can use to make more informed decisions.

3. DigitalCoinPrice?

DigitalCoinPrice is a cryptocurrency forecast site tool that provides price forecasts for over 1,500 cryptocurrencies. The site offers both short-term and long-term price forecasts and provides a detailed analysis of each cryptocurrency’s price history and market trends.

4. CoinPredictor

CoinPredictor is a unique cryptocurrency forecast tool that uses artificial intelligence and machine learning algorithms to analyze and forecast cryptocurrency prices. The site provides daily price forecasts for over 250 cryptocurrencies, and it also includes a range of technical analysis tools that investors can use to make more informed decisions.

5. WalletInvestorX

WalletInvestorX is an advanced version of WalletInvestor that provides more detailed price forecasts and analysis for various cryptocurrencies. The site uses advanced machine learning algorithms and forecast models to analyze market trends and forecast future prices. It also offers a range of technical analysis tools and indicators that investors can use to make more informed decisions.