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Bitcoin& #39;s price follows a random walk - and that& #39;s fine! A thread: 
https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">Over the last couple of days, I& #39;ve seen a lot of confusion regarding the empirical review of @100trillionUSD& #39;s S2F model by @Kripfganz at the last @ValueOfBitcoin. 1/9
Sebastian& #39;s key result was that - after meticously disecting (see pic) the statistical model in deterministic effects, a potential long-run relationship and short-term elements - that he couldn& #39;t identify an equilibirum relationship between the S2F ratio & the Bitcoin price. 2/9
If you don& #39;t account for all deterministic elements (the step function of the rewards - 50, ... 6.25 - is such a deterministic trend), the results of cointegration tests are not meaningful. If you& #39;re interested in that, watch out for a forthcoming piece by @BurgerCryptoAM 3/9
Sebastian concluded that the most appropriate model (based on the data) for Bitcoin& #39;s price is a random walk (RW) with drift. Let& #39;s clarify what a RW with drift implies by showing what it DOES NOT mean. 4/9
It doesn& #39;t mean that there are no fundamental drivers of BTC& #39;s price - whether BTC related (Satoshi& #39;s disappearing, social attacks such as BCash, node count, lightning or halvings) or with respect to the general macro and political environment (QE infinity or regulation). 5/9
Using a random walk model for Bitcoin doesn& #39;t mean leaving the realm of human action and falling into the world of molecular motion. It just means that price swings such as in March can& #39;t be predicted (on a consistent basis). 6/9
This doesn& #39;t mean that you can& #39;t form your own assessment of Bitcoin being under- or overvalued (using praxeology, see the talk "The last money": https://youtu.be/5m0kPEvHZBY ).">https://youtu.be/5m0kPEvHZ... It just precludes the view of a mechanical/high certainty relationship between a driver and BTC& #39;s price. 7/9
And: It doesn& #39;t mean that everything that happened since 2009 were fleeting coincidences. The whole point of a RW is that all the little random shocks add up & have a lasting impact (pic). Also: The (positive) drift can be seen as a constant adoption / Lindy effect over time. 8/9
Bitcoin developed over time to become a monetary, social, and (a-) political construct that can neither easily be put in existing mental boxes nor in statistical models. 9/9
