It’s Super Bowl week, and that means it’s time for a yearly tradition that is near and dear to our hearts: analyzing silly proposition bets that have nothing to do with the game’s outcome.
Each year during the Super Bowl, sportsbooks around the world offer prop bets on everything from the result of the opening coin toss to the person the Super Bowl MVP will mention first in his speech. Typically, books are quite careful about the odds they post and the bets they accept. After all, if they weren’t cautious, they wouldn’t be in business for long. But the Super Bowl makes everyone a little bit crazy, and books can sometimes offer good odds on exotic bets that are hard to properly price. And the wagers make for interesting puzzles. In previous years, we’ve analyzed props on how long Gladys Knight would take to sing the national anthem, the most likely opening song in Jennifer Lopez’s halftime show, and which word Amanda Gorman would utter first during the performance of her pregame poem.
This year we’re conducting our most ridiculous analysis yet: We attempt to handicap whether the price of bitcoin will rise or fall during the Super Bowl. As of this writing,1 the odds that bitcoin — the cryptocurrency that some love, and others love to hate — will rise are slightly higher than the odds that it will fall, at least according to the online sportsbook Bovada. The money line for the wager that the price of bitcoin will rise is currently priced at -130, which represents an implied probability of 56.5 percent (inclusive of the sportsbooks’ margin, or vigorish). Meanwhile, the line for a bitcoin Super Bowl retreat is even, good for an implied probability of 50 percent. Bovada apparently believes the bulls will be out on Super Bowl Sunday, pumping up the price of bitcoin. But is it on the right side of this particular wager?
Before we answer that question, we should first delve into the drivers of bitcoin price fluctuations — and there are a lot of fluctuations. Unlike other tradable assets like commodities or equities, bitcoin’s price doesn’t typically move on changes in the cryptocurrency’s underlying fundamentals. The code that controls bitcoin continues to change as new features are added, but the basic underpinnings of the cryptocurrency that affect the scarcity — and thus, at least ostensibly, the price of a bitcoin — have been fairly stable over the past decade.since 2012.">2 Instead, the price of bitcoin is driven by speculation. Investors bet on what other investors will do in the future, and if enough people believe that other people believe that bitcoin will go up in price, and act on it, bitcoin will indeed go up in price. Some refer to this type of behavior as a speculative bubble, and we’ll be engaging in exactly this type of analysis to understand which side of this wager to bet.
First, to ground our expectations, we need a base rate. We used BTC closing price data posted on Kaggle by Mark Zielinski from 2012 through March 2021, collected at one-minute intervals from various exchanges.3 We filtered the price data to just those trades that occurred from the kickoff to the final snap of each Super Bowl since 2013.4
Beginning with the Harbaugh Brothers’ Blackout Bowl, the first four Super Bowls of the bitcoin era ended with the price of the cryptocurrency lower than when the game started. It wasn’t until 2017 — when now-noted cryptocurrency enthusiast Tom Brady led the New England Patriots to a historic comeback after falling behind 28-3 to the Atlanta Falcons — that bitcoin ended its first Super Bowl with a price higher than when the game started. The tenacious currency followed its first win with another in Super Bowl LII. Two years of losses followed in Super Bowl LIII and Super Bowl LIV before bitcoin rebounded last year in Brady’s final Super Bowl win, with Tampa Bay.
It’s perhaps fitting that the only Super Bowls over the past nine years in which bitcoin’s price rose were ones that involved Brady. Or maybe it’s just because Brady played in so damn many Super Bowls. But while Brady won seven of the 10 times he stepped on the field for a championship game, bitcoin has fared much worse: In six of the past nine Super Bowls, the cryptocurrency has lost value over the course of the game.
With this base rate of 66.6 percent in hand, we can look for reasons to adjust our expectation for bitcoin’s price at the end of Super Bowl LVI. Most promising for bitcoin bulls: The last time bitcoin was coming off an all-time high at the end of a calendar year, and subsequently followed that peak with an implosion of at least 40 percent of its total value, bitcoin’s price rose in the Super Bowl. In late 2017, bitcoin reached a then-record high of nearly $20,000, only to promptly set itself on fire in early 2018 and drop to a pregame Super Bowl LII price of $7,876. Bitcoin’s Super Bowl dead cat bounce was large, as bitcoin rose all the way to $8,238 by the end of the game.
Bitcoin faces a similar situation this year. After peaking at $67,549 in early November, it dipped below $40,000 last month and is currently trading around $42,000 heading into Super Bowl LVI. Speculators could leverage the game to try to pump up the price, especially if Crypto.com airs its commercial starring Matt Damon reminding viewers that “fortune favors the brave.”
We concede that the chance of a price drop is probably lower than 66.6 percent, but there are other reasons to short bitcoin in-game. The Super Bowl attracts millions of viewers each year, but the share of 18- to 49-year-olds that watch the game has been steadily decreasing during the bitcoin era. In 2013, 50.2 million people in the “key demographic” watched the Super Bowl. In 2021, that number was just 34.3 million. If most bitcoin speculators are men between the ages of 18 and 45, the Super Bowl seems to have become a less reliable way to reach them.
And finally, a pump isn’t worth much to a pumper without a subsequent dump. If speculators see bitcoin’s price spike during the game, they may sell en masse to lock in their profits. Most of the recent bitcoin price charts show this pattern of sell-offs after a second-half price spike, and that seems more likely than not to repeat. All of which makes a wager on bitcoin’s price falling during the Super Bowl at even money a solid value bet.
Best of all, you don’t have to buy fake money to potentially profit from betting against bitcoin. Bovada and other sportsbooks still accept dollars, and they still settle their bets with actual United States legal tender. Good morning, crypto fam.
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