Greek Researchers Suggest Efficient Market Hypothesis Could Boost Bitcoin Trading
Summary:
A research study conducted by Greek scholars from the International Hellenic University and Democritus University of Thrace suggests that the "efficient market hypothesis" (EMH) could apply to Bitcoin trading, potentially outperforming traditional hodl strategies by nearly 300% in simulated cryptocurrency portfolios. The team developed four artificial intelligence models trained with different datasets, the best of which beat standard returns by up to 297%. However, the study is based on historical data and imitation portfolio management, and may not sway those opposed to EMH's effectiveness.
Scholars from the International Hellenic University and Democritus University of Thrace in Greece have released a study supporting the "efficient market hypothesis" (EMH) in the context of Bitcoin trading. This controversial concept is said to have shaped models that outperformed the standard hold-on-for-dear-life (hodl) approach by nearly 300% in virtual cryptocurrency portfolios. The study findings suggested: “Our models provided forecasts that allowed investors to amass greater profits than if they adopted the commonly used buy and hold technique.”
The cornerstone of the EMH is the belief that a financial asset's price accurately reflects its fair market value and all relevant market data. If this were the case, it would be futile to attempt to outpace the market by attempting to predict peak times or intuitively select high-performing stocks. Usually, EMH advocates recommend adopting a strategy of investing in low-cost passive portfolios instead of trying to outsmart the market with well-timed undervalued stocks.
On the contrary, EMH critics often discount such arguments, citing figures like Warren Buffet, who have built successful careers by outwitting the market. The research team from Greece, whose study focused solely on the Bitcoin market, proposed replacing the conventional "buy and hold" method with EMH to counteract market fluctuations. To substantiate their concept, they crafted four unique artificial intelligence models, each utilizing different datasets. Following the training and testing phase, they selected models that could outperform both 'beat the market' and hodl strategies.
The scholars revealed that, at best, the optimal model surpassed standard returns by up to 297%. This adds some weight to the notion that EMH could serve as a valuable strategy for Bitcoin and other cryptocurrency traders. However, it's important to note this study relied on historical data and imitation portfolio management.
While the study outcomes are based on empirical data, they likely won't sway the opinions of those staunchly opposed to the effectiveness of EMH.
Published At
11/10/2023 7:06:33 PM
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