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Here’s a prediction you can bank on: 95 percent of cryptocurrency price predictions will be completely wrong.

And the five percent of predictions that actually come true will only be correct through sheer dumb luck. After all, even a stopped clock tells the right time twice a day. So let’s dig deeper into this “price prediction” myth we’re all currently living.

THE SOURCES OF CRYPTOCURRENCY PRICE PREDICTIONS

If you’ve subscribed to a Facebook group or perused the Reddit forums you’ll be familiar with posts and articles claiming to have inside info on cryptocurrency price predictions. These articles clearly drive traffic, because everyone wants to know which coin will “moon.” Smartereum has a price prediction article for pretty much every crypto on the market. They claim that VeChain will trade at $19.63 by the end of the year and $75 in five years. Tron will be $1.10 in December and if you invest $100 in Iota now you will get $1782 by 2020. Furthermore, Crypto sage/lunatic John McAfee famously predicted Bitcoin will be worth $500,000 by the end of 2020 or that he would ‘eat his d — on TV’. Hopefully, you get the point by now. But are any of these claims real?

CRYPTOCURRENCY PRICE PREDICTIONS ARE NOT BASED ON FACT

Many cryptocurrency price predictions just estimate based on current trends, So if a coin grew by 10 percent last year, people tend to predict it’ll grow by 10 percent again this year. That’s how Crypto Daily worked out that Ripple will be worth ‘near $2,000’ within 12 months.

Cryptocurrency markets are particularly hard to predict because they are based on speculation, rather than fundamentals (i.e. seeing how many iPhones Apple sells), and because many ‘investors’ are ill-informed noobs taking large gambles on cheap coins they know nothing about in the hope of astronomical returns. It’s difficult for the market to price anything correctly. Even in the ‘real’ stockmarket forecasts are rarely reliable and predictions often fail.

SCIENCE BEHIND CRYPTOCURRENCY PRICE PREDICTIONS

University of Berkeley professor Philip E. Tetlock took a scientific approach to cryptocurrency price prediction and asked 284 experts to make a combined 82,361 predictions about the future. After comparing the predictions to what actually occurred, Tetlock concluded most experts did little better than ‘a dart-throwing chimpanzee’.

Importantly for crypto, he also discovered that the more confident an “expert” is about their prediction, the more likely they are going to be wrong. So that guy telling you on Reddit without a shadow of a doubt that a coin ‘can’t fail’ and is definitely ‘going to moon’ isn’t worth listening to.

So what to do? Well, instead of thinking in terms of price predictions, perhaps it’s better to think about hypothetical future scenarios for a promising coin. We need better-argued investment cases and fewer people plucking price predictions from thin air.

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