Member-only story
What Bitcoin Price Predictions Teach Us About Tribalistic Thinking
Are markets truly efficient, or can technical analysis reveal secrets? The answer depends on what you believe.
When I recently came across a chart in a Wall Street Journal article I had a strong sense of déjà vu. While I may not be able to remember what chores I had agreed to do earlier in the day, I knew I had seen a similar chart in a book I read 40 years ago. When I pulled the book off my office shelf, there it was, in the “new and revised fifth edition” of a classic investment book originally published in 1948 (and as I found out later, now in its eleventh edition). The book was Technical Analysis of Stock Trends by Robert Edwards and John Magee. The chart was of bitcoin. And the trend didn’t look good for bitcoin bulls.
Is there value in the “technical analysis” interpretation of the chart? I was skeptical because I was trained by the “efficient markets” tribe at The Wharton School, but wanted to keep an open mind, so I knew it was worth a closer look. And through my investigation I came away with a fresh perspective about tribalism that transcends investing.
Bitcoin’s Price 2020–2021
Let’s start with a recreation of the chart I saw — I gathered my own data and…
