The cryptocurrency market trades globally 24 hours a day. Anyone who has been watching the price of Bitcoin understands the price moves very fast. Realize that people are always driving the price changes, and people are not always rational, not always emotional, but are rarely random. Since people are driving the price, the price patterns are not random and as with all markets, the psychology of the Bitcoin market matters.
Does the Brain Influence Bitcoin Price?
People prefer round numbers. Although Bitcoin can be traded in fractions, many new people buying cryptocurrency for the first time still seek to own at least one Bitcoin. Why is that? It is because the human mind, although highly skilled at math, stores information in definitive chunks. For example, we have separate memory systems for people’s faces because that information is important enough to get its own mental database. When we think about time, we think about it in hours or days, even though time is continuous and never stops. When we think about weather, we think about it as rainy, or cloudy, or hot or cold, even though rainfall and temperature are both measured in decimals. Bitcoin price is no different and because this market is highly influenced by speculation and speculation is based on perceptions, the psychology of price influences the Bitcoin market. That hypothesis is aligned with some recent analysis I conducted. As a quick reminder, my professional training is in understanding people, not markets, but in this case, I have blended the two.
Bitcoin is not Random
Although the price moves often, Bitcoin prices also tend to sit in some locations and rest. The question is, where does the price rest most often? To answer this, I first conducted complex statistical normality
