Crypto trading algorithm

Posted by Dr. Yan Lyansky on 24th Nov 2021

Crypto traders are looking for an automated trading algorithm to value crypto. I have talked with multiple crypto experts and I have told them it is not possible. Why? I have multiple arguments, I will use the most mathematically applicable.

The valuation of a crypto model, should track the valuation of stock and options....since these are similar. The Black & Scholes model is the most popular stock market option pricing model. Using similar ideas we can represent volatility of crypto using Brownian motion ( normal distribution ). However there is no inherent way to value the price at an initial time. Opinions vary, but there is no P/E or other earnings metric to provide a valuation. Without a proper initial valuation, all future valuations will be worthless.

Please don't pay for a crypto trading program, which guarantees you profits. It will work for a little while, and then it will fail for some time. Only the seller of the program will benefit, the buyers will lose.