The reason for this instability is the average level of investor skill in this space. it is exceedingly low. thus, actors are more prone to react, and this behavior, to a degree, is predictable. if there was a tool to scan the webs for bitcoin news, and read the news to gauge majority public sentiment, i think that particular piece of code would be a crystal ball into the behavior of the markets. observe how the price reacts to rumors, let alone actual developments.
if you had a team of guys reading social media 24 hours a day, you should be able to make mostly accurate signals, in my opinion.