From | A team at MIT has developed a prediction algorithm that allows them to determine when the price of the infamous volatile cryptocurrency, Bitcoin, will drop or rise. Using this method, the researchers managed to double their initial investment in 50 days, all through an automated process that involved more than 2,800 transactions. Since the last year or so, Bitcoin has exploded on the market sitting today at nearly ten times the price it was valued only 2 years ago. Many early investors who believed in the currency and locked their investment have now become wealthy, yet because there are few places you can actually use Bitcoins, the currency is mostly regarded as a commodity.


As such, most investors put money into Bitcoin to speculate and earn returns. This behavior has significant consequences on the currency’s trading patterns, with prices fluctuating heavily on a day to day basis. With this in mind, is it possible to predict future returns for Bitcoin trading? A researcher at MIT’s Computer Science and Artificial Intelligence Laboratory and the Laboratory for Information and Decision Systems recently developed a machine-learning algorithm that does just this.

Can history predict where the money will flow?

Devavrat Shah and recent graduate Kang Zhang, both at MIT, collected  price data from all major Bitcoin exchanges, every second for five months, accumulating more than 200 million data points. This step was critical – the researchers needed as many points as possible for their historical analysis to make better predictions.

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