# A mathematician calculated the bitcoin exchange rate on this year

One of the users of a Medium named Joel Lopez Mortazavi in his post:

"I did the calculation, and vycheslit the exchange rate of bitcoin against the dollar this year. The result will surprise you for sure!"

To the post was the disclaimer "this is all just my own opinion, please don't take it as a recommendation for investment." Lopez calculations start from the fact that this year, bitcoin will show the same behavior as in past years. The author says that bitcoin is "healthy money" and Fiat currency – not really. Well we will monitor - the exchange rate of bitcoin to dollar online.

In the basis of the forecast Lopez is the method of Monte Carlo. It consists in the application of several algorithms for calculation, and all of them are based on repeated random samples. In this particular case, a mathematician uses profits from bitcoin in dollar terms, to figure out approximately how much bitcoin will be worth by the end of this year.

To calculate profit for the day, Lopez finds the ratio of the current value of bitcoin to yesterday's price and then subtracts from the resulting result is the same: "If we use simulation Monte Carlo for financial insights, topredictable that the behavior of any asset in the future podobnego position in the past. We need to write a lot of random scenarios of the future development. Mathematics gave this technique the name "random walks". The full code for such kind of simulations can be found on GitHub.

To "write"each new scenario you take randomly the values of profit per day from bitcoin since 2010 until now. You add these values, and then multiply the cumulative up to the end of December this year. Then you find the product of the current bitcoin exchange rate indicator and a random BLardania. Here is the forecast future value. All these operations have to perform repeatedly. I did it 100 thousand times. At the end of December 2018 before us there is the final allocation of the cost for each of the random walks.

The first two hundred thousand of the 100 random walks have the following form:

We find that the final cost for the most part random walks is in the range of 10-100 thousand dollars.The second chart shows you how to allocate the total price for all 100 thousand of random walks:

The chart shows that most likely the exchange rate of bitcoin is established in the framework of 24-90 thousand dollars.

### To understand everything more thoroughly, there are several ways:

**way №1 – computation of 50% potentialability total cost. He is 58 843 dollar;****way №2– calculation of probability density function using cadernos assessment of density and mahoganycurls, sootvetstvuyushchei cockedey function – 55 $ 530.**

But the resulting value cannot be considered a final figure. I recommend to use it to calculate the confidence interval. For value of bitcoin the sum of 80% confidence will intergalactic 13 200-271 277 dollars. From this interval we can conclude that in December of this year bitcoin will fall below $ 13 200 with the same probability as rise above 271 277 dollars.

All we already know nuclear density estimate. We can now calculate the possibility that the exchange rate of bitcoin to the end of 2018 will decrease on a particular indicator. Or rather, the possibility that the cost of bitcoin will remain at 20 Jan (12 thousand dollars) or more will fall is equal to 9.84%.

ckquote>Please note that this approach is not a direct guide to action. Because the cryptocurrency market is unregulated sphere.And the big players are able to manipulate him. Plus, the exchange rate of bitcoin is dependent on economic and political events in the world. A major hacker attacks on cryptocurrency exchanges caused a downturn in the market more than once.