Bitcoin Trading Experiment Shows 300% Higher Returns Than HODLing, Researchers Claim

A team of researchers from the International Hellenic University and Democritus University of Thrace in Greece recently conducted a study supporting the “efficient market hypothesis” (EMH) in the context of Bitcoin trading. According to their research, they were able to develop models that outperformed the traditional HODL (hold) strategy by almost 300% in simulated crypto portfolios.

The efficient market hypothesis is a controversial theory asserting that an asset’s share price reflects its fair market value, incorporating all relevant market information. If accurate, this theory implies that attempting to time the market or intuitively predict winning stocks is futile.

The researchers claimed in their paper:

“We manage to generate models whose forecasts give investors the ability to record higher profits than the ones they would have if they followed the well-known buy and hold strategy.”

In the world of traditional finance, supporters of EMH often advocate for low-cost passive portfolios, arguing that attempting to beat the market through timing and stock selection is unlikely to succeed consistently. However, critics of EMH point to successful investors like Warren Buffett, who have built careers on outperforming the market.

The Greek research team applied EMH specifically to cryptocurrency trading, proposing it as an alternative to the standard “buy and hold” or HODLing approach to navigate market volatility. To test their hypothesis, they developed four distinct artificial intelligence models trained with multiple datasets. After training and testing, they selected models optimized against both “beat the market” and HODLing strategies.

The researchers reported that the optimal model outperformed baseline returns by up to 297%. While these results lend support to the idea that EMH can be a useful tool for Bitcoin and cryptocurrency traders, it’s important to note that the study used historical data and simulated portfolio management.

Despite the empirical evidence presented by the research team, strong opinions against the efficacy of EMH may persist, and the study’s findings might not sway those who are skeptical of the theory.

By Urik

My professional background is in public relations and I am the founder of Cryptochating. My journey into blockchain technology started four years ago, and I haven't looked back since then. The future of decentralized technology is incredibly fascinating to me, and I am passionate about communicating how it will change the world.

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