Quote from: deisik on April 28, 2020, 08:07:36 AM

Quote from: fillippone on April 28, 2020, 07:45:05 AM

Quote from: deisik on April 28, 2020, 07:15:05 AM

Quote from: fillippone on April 23, 2020, 01:46:43 PM

Plan B just tweeted this:

Quote

#Bitcoin stock-to-flow model on 2010-2012 data still usable in today. It predicted post-2012-halving and post-2016-halving levels quite well. Will it hold again, after May 2020 halving?Crossed fingers

No offense intended, by from my vantage point anyone who takes years prior to 2015 (not even speaking of 2010-2012) and says that their model works good on them too actually discredits the approach they are taking. In reference to Bitcoin, for early years one should use models and frameworks describing stochastic processes like random walk as Bitcoin's dynamic back in the day was completely chaotic and random

This is not to say that today's prices are not random for significant part, even though with more fundamental factors at play now

Why would they?

Because prices were random in those years

So anyone who tries to describe the early Bitcoin history using anything other than pure statistics and its methods, which are descriptive on their own and say nothing about the driving forces behind the raw data, is actually trying to derive a meaning from, or relate a meaning to, something which is, or was, meaningless (as a process) due to its random nature. If you ask me, this is not a good idea as it casts doubts on the plausibility of the entire approach

In fact, I understand why people are doing this all the time (because they are looking for coherent explanations and plausible reasons for anything, even entirely random things), but any model, which is not statistical, either explicitly or implicitly, should separate the random part from the part which it tries to explain if it is to have any predictive power, i.e. an ability to generate verifiable predictions. But in case of early Bitcoin, there is simply nothing to winnow out

That is the point.
It wasn't random, because there is a 95% R^2. This means 95% of the price is explained by this model. All the other factor are explaining 5%.
And this is not a spurious correlation (like high correlation between people drown in a pool and Nicholas Cage movies) because this model is also cointegrated. A fact that rejects this hypothesis.