Post
Topic
Board Economics
Re: BTC/USD fx rate back onto 3-year trendline
by
WackyWilly
on 02/07/2013, 08:33:28 UTC
I appreciate the effort but without more information this chart is of dubious value. What is the trendline based on? Unless it's based on stats and/or financial indicators then there's just too much room for curve-fitting and, effectively, useless.

There is no magic. The chart is average daily mtgox values, presented on a log chart with a least squares straight line (exponential, of course). Obviously the future is hypothetical, but this is the best fit projection using known data.

That's exactly the case: it is a regression line, using known data. The current value vs. regression line simply means, the price is sitting at the line. No more, no less. It could mean the price might turn up again.

HOWEVER, it does not mean in ANY way:
* that prices can't fall any further (after which they might start rising again)
* nor that prices might also have already topped at their all-time-high.

There is just no way of telling, not even with your regression line.
Implicating anything else would be an insult to the science of Statistics.

Bottom line: a regression line is of no practical prospective use, it is for historical (ex post) analysis.