A Study on Forecasting the Prices of Bitcoin Through Technical Analysis

Abstract

Cryptocurrency has gained significant traction among Indian investors since 2013. These digital currencies utilize cryptography to secure the generation of units, facilitate transactions, and verify ownership. Bitcoin (BTC), a prominent cryptocurrency, operates as a virtual currency to serve as a decentralized form of money and payment method. It is designed to function independently such that no individual, group, or entity is involved in financial transactions.

The process of cryptocurrency involves rewarding blockchain miners for their role in verifying transactions. In exchange for their efforts, miners receive cryptocurrency, which can also be acquired through purchases on various cryptocurrency exchanges. This decentralized and cryptographic approach to currency has contributed to the widespread adoption of cryptocurrencies like Bitcoin, reflecting the evolving landscape of financial transactions in India and globally.

In this study, trend analysis of bitcoin has been done on the past 5 years’ closing price data ranging from 2018 to 2022 through technical analysis. The key indicators used for this study are the Relative Strength Index, Moving Average Convergence and Divergence, and on balance volume, (most common indicators as given by Trend Spider) the results showed that the Crypto market is underperforming showing a bearish trend thus providing a buying opportunity for long-term investors.