Bitcoin News
By Bruce Buterin
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Why Markets Keep Breaking the Models. The core problem has a name: non-stationarity. Relationships between variables don't stay stable…
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Backtest Overfitting and the Illusion of Success. Backtest overfitting is probably the single biggest trap in this field.
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Stock-to-Flow and Metcalfe's Law Under Pressure. Two of the most popular Bitcoin valuation frameworks — stock-to-flow and Metcalfe's Law — have…
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Bitcoin forecasting is a crowded field. Dozens of models compete for attention — scarcity-based formulas, on-chain activity trackers, power-law charts, machine learning systems…
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That's pretty much the finding from a preprint by Carlos Baquero from the University of Porto.
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Short-term forecasting is a different story, kind of. Order flow predictions and daily return models have shown some genuine value.
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Research by Francesco Puoti, Fabrizio Pittorino, and Manuel Roveri backs that up. Their study looked at naive models versus more sophisticated ones — ARIMA and LSTM networks —…
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And it's not just a matter of model choice. Information leakage and sloppy data handling can inflate accuracy metrics to the point where they mean nothing.
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Backtest overfitting is probably the single biggest trap in this field. Researchers keep refining models against historical data until the results look great.
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Related: Bitcoins 25% Surge Sparks Familiar Debate Over Market Cycle Claims
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The fix exists. Walk-forward evaluation and multiple holdout windows — methods that involve retraining models repeatedly on fresh data and testing them across varied market…
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High accuracy numbers in backtests are seductive. They attract attention, get papers published, and sometimes move markets when they're publicized.
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Alexander Shelton's 2024 study tested Bitcoin return predictions using these frameworks. He found that stock-to-flow and Metcalfe variables could explain returns within the…
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Stock-to-flow has faced particularly visible pressure. Bitcoin's actual price has diverged from the model's projected path for extended periods.
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Related: Hargreaves Lansdown Shifts Stance, Now Offers Bitcoin ETNs to Retail Clients
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