Forecasting Top Cryptocurrencies: A Weighted Average Approach

This report provides a cryptocurrency forecast for the top three cryptocurrencies by capitalization as of September 2018, with a target forecast date of the end of December 2018. The analysis employs two primary approaches: a) independent calculations and data analysis (20% of the marks) using methods like Exploratory Data Analysis, Regression, or Forecasting models, and b) a synthesis of secondary forecasts and expert opinions (20% of the marks) gathered through research. The final forecast is presented as a weighted average of these two approaches, accompanied by a rationale for the weighting scheme. The report delves into the dynamics of the cryptocurrency market, expert predictions, and factors influencing cryptocurrency values, including Bitcoin, Ethereum, and Ripple, to derive a comprehensive and balanced forecast.

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INTRODUCTION
A cryptocurrency is a digital asset formulated to be used as a medium of exchange just
like money that is used as a strong cryptography to enhance control, transactions and it creates an
additional unit and enhances the transfer of assets. They are used as an alternative currency and
digital currency i.e. uses virtual currency.
Almost all Cryptocurrencies aims at utilizing decentralized control. The decentralized
control of the cryptocurrency works with supplied ledger technology, like a typical blockchain
which works as financial transaction databases for the public. A decentralization process is
whereby the actions of a company, mainly those involving decision making and planning, and
the distribution comes from the central authoritative location to others. Decentralization concepts
have been used in management science and group dynamics to disciplines such as public
administration, law, administration, political science, money, private businesses, and electronics.
A cryptocurrency is a form of a digital asset. A digital asset is something that exists in
binary format and also has a right. Data that lack the right are not regarded to be assets. Its
examples include but are not limited to electronic mails, word document, animations, logos,
spreadsheets, illustrations, and their respective metadata. The is an increase in the number of
different types of digital assets due to the increasing number of devices utilized for digital e.g.
smartphones. A digital asset is a form of management that portrays an intertwined structure
comprising of both hardware and software and/or other services in order to edit, manage, ingest
and organize the respective digital assets. These possess money or specific sentimental value,
and because digital assets represent the goods sold by a business or they themselves are among
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the goods being sold, hence their value almost always increases according to the quantity of their
usage.
A cryptocurrency is also a form of digital currency. A digital currency is a type of currency
available in a digital manner. (As opposed to physical mechanisms such as notes and coins). It
has properties similar to digital currencies but has the capability of allowing for immediate
transactions and borderless transfer of ownership like virtual currencies and cryptocurrencies.
These currencies can be useful in buying and selling commodities but may be restricted to
certain communities such as for inside an online site or even a social media network.
LIST OF TWO MAJOR CRYPTOCURRENCIES
Bitcoin
Ethereal
There were over 1600 cryptocurrencies over the internet as by August 19, 2018. These
numbers have grown due to huge profits they are making gradually (Satoshi 2017).
Bitcoin currently is the largest blockchain network followed by ethereum, Ripple, Bitcoin cash,
lite coin, and EOS. People can make money from cryptocurrency business by Day-Trading, ICO
flipping (initial coin offering), mining cryptocurrency.
In the recent past, many experts have had negative forecast and ideas concerning
cryptocurrency trade. But this has not come to pass as despite various negative forecasts, the
interests are shot up and fortunes are still being made out of the trade. Some financial experts
have continued and are still continuing to term the trade as one of the huge scams to ever hit the
economic world. Bitcoin’s meteoric has risen in price over the last years and this has awakened
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mainstream interest in the very original cryptocurrency. Investing in bitcoin has never been
popular because the prices were looking bullish, but this rise has not been without consequences.
One of the disadvantages of the new investors indulging themselves into the market is the
increased number of scams and frauds, from ICO scandals to wallet theft and fraud. Bitcoin is
one of the newest cryptocurrency robots that has entered the market. It is suitable for both
amateurs and experienced traders as such. The software gives traders the opportunity to invest in
the lucrative field of crypto assets, especially bitcoins generate substantial returns. Despite being
new in the industry, bitcoin profit has been on the rise. It is touted as a genuine and reliable
option for trading bitcoins. People have moved tremendously into the bitcoin market because it is
easy and you don’t have to undertake education or training in this area. The trading system is
quite transparent with its presentation. According to John Mayers, the team guides traders along
their way to financial independence.
BITCOIN PREDICTION FROM VIEWS FROM EXPERTS
According to some experts, these are the kinds of currencies where no one truly knows
what's going to happen and we can't really predict precisely what's going to happen in the future
or near future of the many cryptocurrencies currencies. With bitcoin down more than 50 percent
so far this year, there’s a chance some November investors have triggered (or will trigger) a tax
loss by either selling or trading or spending it. But somehow the tax returns provided are not very
accurate since some anonymous traders do not report their gains or losses (Edge 2017). For
example, the IRS found that from 2013-2015, only 800 traders who are paying the tax claimed
bitcoins profits in each year. The IRS has been constantly saying in the past years that bitcoins
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and the other over 1500 -plus digital assets are actually on their radar. The IRS did a research
whose report stated that every year(from2013-2015) it's only about 800 traders who've claimed
bitcoin profits. And during that time, the price of the coin rose to and 430 from about and 13. you
can clearly see how tremendously the growth was witnessed in a span of only 2 years. Last year,
bitcoin investors were more likely to have made profits than losses. The profits of the company
rose during 2017 to reach a trading high of more than sh.19300 in the late December after
opening the year below 1000. There are some people though like Tom Lee who despite the
present market crash, the major wall street crypto bull has repeated his recently diminished year-
end price which was predicted for bitcoin at and 15000 in an interview with CNBC's squawk box
on Tuesday, November 20th. In the recent statement, the head of research at Fund strat Global
Advisors pointed out two major types crypto-players in the market– there are some who are
using it and they own wallets in the crypto world and then there are those who belong to some
speculative side of the crypto-market. And according to Mr.Lee, all those two sides of the crypto
global market should find a way of sort of interacting with each other for crypto investors not to
get burnt by crashes like these. While reiterating his crypto-rebound prediction, Lee stressed that
institutional cryptocurrency investors are not necessarily getting exploited by the recent market
unfavorable conditions even as bitcoin price dropped sharply to as low as $4237 on November
20th, this year. Mr. Lee emphasized that the most important role of institutional participation in
this industry, arguing that mainly, this part of the market will be a new way that's going be
assimilated soon. He said that there are two key factors that will soon bring more organizational
interest to the industry. Firstly, it will start by the upcoming launch of the digital assets Bakkit
by the management of NYSE(New York Security Exchange), ICE(International exchange) that
was announced on August this year and was scheduled to take place on January 24, 2019
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(Mukhopadhyay et.al. 2018, pp. 745-752 ). Secondly, the institution shall be involved majorly in the
market industry because this particular industry will be receiving more regulatory clarity which
is underway now. Mr. Lee emphasized that bitcoin is not necessarily a valuable asset, saying that
should probably be best viewed as a commodity (Mitsuru, Kitamura, and Matsumoto 2014).
Therefore, Mr. Lee who is a cryptoanalyst noted that Bitcoin is "not necessarily a
valuable asset," claiming that it is “probably best viewed as a commodity," and is "really an
opportunity for emerging asset traders". Mr. Tom Lee had reduced his year-end Bitcoin
prediction price from $25,000 to $15,000 on November 16, due to a huge decline on the markets
industry that started on November, 14, with the leading Bitcoin marking very low prices in the
year. Previously, Mr. Lee had many times, predicted that Bitcoin's price would shoot up above
$20,000 at the end of the year. Me Lee pronounced his first prediction in January 2018
prophesying an aggressive buying, while remembering the $9,000 price mark as “the biggest
buying opportunity in 2018.” Netherlands-based “Big Four” auditor KPMG released another
prediction on cryptocurrency, saying that the industry needed institutional investors' involvement
so that it realizes its ability. Earlier, CoinShares CSO Meltem Demiro announced that the recent
fallback of the markets was due to the initial backing at the beginning of the year. In January,
Mr. Lee prophesied that Bitcoin would be making a valuation of $25,000 US at the end of this
year. At the middle of the year in July, Lee made another prediction which was $22,000 USD
and then held his optimistic point in August and made a prediction once more that Bitcoin would
be at $25,000 USD. Organizations refusing to make major investments in the market due to
Bitcoin Cash's (BCH) hard for London. On Tuesday, Bitcoin had the lowest fallback during the
year, dropping with a 10% margin to 4300 dollars and made a huge loss ever in the world's
digital coin to 25% in a week. (Zhao 2015, p.91).
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Other minor coin businesses also had a sharp drop, this was said by traders of
cryptocurrency that it had a huge sale in Asia. The lowering succeeded a quick plunge the
previous week which shook bitcoin from a period of conditional equilibrium, the prices had
shifted to around 6500 dollars in a period of several months.
It went down by the amount equivalent to 4,427 dollars, this was recorded the lowest it
has ever attained since 2017. In the same afternoon, it was reported to be trading at a price
amounted to 4,750 dollars on the Bit stamp exchange. Mati Greenspan said that they had been in
the processing of waiting for an evident break-out, he said all this at eToro (Barkatullah, Javed,
and Timo 2015, pp. 68-76). He went on to explain that whenever you observe that there’s a steady
movement of the price and then you experienced several stop-loss orders then you have to expect
them to be liquidated.
Ripple’s, which is ranked number two and three of all the coins, fell from 14% -16%
respectively prior to making consecutive losses in the US. Then there was a greater drop in the
financial markets. Even the European shares fell to poor retail results.
Considering a peak of 20,000 dollars in December, it has dropped to over 75 % this year
and small investors invested in bubbles. Its slide was blamed by traders on how heavily they
were sold in Asia (Hong Kong) on Leverage Exchanges as OKEx and Bitmex. Asian venues
have been made popular since bitcoins were lending to traders by West exchanges.
Michael Moro said that the presence of leverage is evidently making traders be attracted to Asian
markets. He is the CEO of one biggest over-the-counter trading desk called GGT (Genesis
Global Trading) which is located in New York. He is also said that folks who are always risking
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hundred tines type of leverage engage in a difficult type of investment. He referred to it as a
casino mentality.
There was a blame game on the previous week’s hard fork subjected to bitcoin cash,
where software upgrade could destabilize others after it split the 4th biggest coin.
Considering the price of bitcoin, it is sensitive to be debated over on the evolution of its
underlying network. This caused a planned suspension in the previous year by major developers
and the investors. This resulted in a significant breakneck rise (Iwamura 2014).
Concerns over scant regulatory have made mainstream investors stay clear of bitcoin. The other
concerns were over undeveloped market infrastructure. Bitcoin has been struggling to live up to
its billing due to the lack of involvement by traders. (Armstrong 2018, p.361). Its currency value
has depreciated this year.
Regulators and bankers’ fears have been regulated after bitcoin's plunged in values. Their fears
were the risk of finances (Guo and Li 2017, pp. 309-329).
The total value of cryptocurrencies has been calculated to be around 154 billion dollars just form
of 800 billion dollars in January. Cryptocurrency advocates stated that the price vitality was to be
expected since bitcoin was still young.
It was reported that by late afternoon ether and XRP were trading at 142 and 0.45 dollars
respectively on Bitstamp exchange of Luxembourg. Fawad Razaqzada who is an analysis at
Forex.com said the europheria had died and their prices had consolidated with lower lows and
also lower highs. Majority of people lost interest." (ElBahrawy et.al. 2017, p.170623.)
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PREDICTION FROM MY MY OWN VIEW
According to the happenings in the market recently such as the kinds of currencies where
no one truly knows what's going to happen and we can't really predict precisely what's going to
happen in the future or near future of the many cryptocurrencies currencies. With bitcoin down
more than 50 percent so far this year, there's a chance someone November investors have
triggered (or will trigger) a tax loss by either selling or trading or spending it. But somehow the
tax returns provided are not very accurate since some anonymous traders do not report their
gains or losses. The IRS, for instance, found that from 2013-2015, only about 800 taxpayers
claimed bitcoin games in each year. The IRS has made it clear over the last few years that
bitcoins and the other over 1500 -plus digital assets are on its radar. The IRS found that each
year(from2013-2015) Only about 800 claimed bitcoin gains. During that time, the price of the
coin rose to and 430 from about and 13. you can clearly see how tremendously the growth was
witnessed in a span of only 2 years. Last year, bitcoin investors would have been more likely to
have gains than losses. The rise during 2017 to reach a trading high of more than sh.19300 in the
late December after opening the year below and 1000 (Ahmad et al. 2108, p.395). There are some
people though like Tom Lee who despite the present market crash. I henceforth conclude that
bitcoin price will shoot up to a value slightly higher than the $5059.89 to reach $5363
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REFERENCES
Zhao, Y., 2015. Cryptocurrency Brings New Battles into the Currency Market. Future Internet (FI) and
Innovative Internet Technologies and Mobile Communications (IITM), 91.
Mukhopadhyay, U., Skjellum, A., Hambolu, O., Oakley, J., Yu, L. and Brooks, R., 2016, December. A brief
survey of cryptocurrency systems. In Privacy, Security and Trust (PST), 2016 14th Annual Conference
on (pp. 745-752). IEEE.
Edge, W., 2017. Personality Strengths and Weaknesses in Forex Trading.
Satoshi, S., 2017. Cryptocurrency: Beginners Bible-How You Can Make Money Trading and Invest in
Cryptocurrency like Bitcoin, Ethereum and altcoins. CreateSpace Independent Publishing Platform.
Barkatullah, Javed, and Timo Hanke. "Goldstrike 1: Cointerra's first-generation cryptocurrency mining
processor for bitcoin." IEEE micro 35, no. 2 (2015): 68-76.
Guo, L. and Li, X.J., 2017. Risk Analysis of Cryptocurrency as an Alternative Asset Class. In Applied
Quantitative Finance(pp. 309-329). Springer, Berlin, Heidelberg.
Edge, W., 2017. Fading the Momentum in Forex Trading.
Armstrong, S., 2018. Bitcoin technology could take a bite out of NHS data problem. BMJ: British Medical
Journal (Online), 361.
ElBahrawy, A., Alessandretti, L., Kandler, A., Pastor-Satorras, R. and Baronchelli, A., 2017. Evolutionary
dynamics of the cryptocurrency market. Royal Society open science, 4(11), p.170623.
c, Mitsuru, Yukinobu Kitamura, and Tsutomu Matsumoto. "Is bitcoin the only cryptocurrency in the town?
economics of cryptocurrency and Friedrich a. Hayek." (2014).
Ahmad, F.A., Kumar, P., Shrivastava, G. and Bouhlel, M.S., 2018. Bitcoin: Digital Decentralized
Cryptocurrency. In Handbook of Research on Network Forensics and Analysis Techniques (pp. 395-415).
IGI Global.
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