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Topic: Bitcoin price change metrics are useless (Read 216 times)

legendary
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August 08, 2017, 06:49:51 PM
#1
Because bitcoin doesn't have an "open" or "close" to the trading day like securities markets do and trades around the clock, there's no easy way to determine what the price change from day to day is. All the exchanges therefore use a rolling 24 hour period to note daily price movements, which is essentially a useless metric. This is how that method shows a price change hour by hour.




The brown line shows the "change" displayed at any given time against the actual price of bitcoin (yellow line). Essentially, the "change" is always comparing to a point exactly 24 hours ago, which is essentially meaningless because it doesn't tell you if the price is currently moving up or down, just what it was compared to a static point 24 hours ago. After a price increase and then steady price for a period, this method would register as a "falling price change" 24 hours later, which is technically true but meaningless to derive current actual price movements. Here's another more dramatic example of the distortion:



The brown line (price change) doesn't in any meaningful way reflect actual current price changes.

Wouldn't it make more sense for exchanges to classify a trading day as 00:00-23:59 UTC, and display an intra day high and low and then measure the current price against the previous days' high and low? That would at least give the price change metric a current value that far exceeds the current method.

For example, if BTC traded at a low of $2800 and high of $2900 yesterday and is currently trading at $2850, the exchange would show Low +1.79% / High -1.72%. That at least gives you an indication of where it is presently in relation to the high and low yesterday, whereas the current setup only tells you whether it's up or down vs. where it was exactly 24 hours ago, with no information about how far it has or hasn't swung in total since yesterday.

All it would take is for one exchange to start doing this I think for them all to adopt it.
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