Bitconnect Volatility Interest - Is it true?

Hi all,

Bitconnect is an online service that gives a high return to their investors. They say they achieve this through lending your money to a 'trading bot' that will trade the Bitcoin market. The returns they give back to investors are at a rate of approximately 1% every day. This rate varies due to the volatility associated with the price of Bitcoin.

Regardless of whether this is a scam or not, I thought it would be interesting to see if their payouts are in fact correlated with the volatility of Bitcoin. I only have $130 invested into Bitconnect.

In order to investigate this, I pulled the historical daily data for the price of Bitcoin from https://coinmarketcap.com, I did the same for Bitconnect. I then calculated the % change in price between the close price and open price of Bitcoin. I then plotted the returns offered by Bitconnect against the change in Bitcoin price:

To my surprise, the results are quite correlated. This indeed means that if there is a large change in the value of bitcoin, then there be a larger return offered by Bitconnect - just as they advertise. This plot also shows that if the price in BTC fell, they would still offer a higher return. Bitconnect are 'trading volaility' in both the short and long direction.

One thing to note in these results is that I only have the data to capture the daily change. Within any particular day, there may be significant volatility that is not being captured here.

On top of this, I was interested in seeing if the price in the BCC token had any influence, or if some other factors could predict the return such as the change in BCC value. I threw a few predictors into a multiple linear regression model and found that the only variable that was useful in explaining the return was the change in Bitcoin price.

So there you have it. Are they scam? I'm not sure, but they do offer higher returns depending on how much BTC is changing in value, thats for sure.

If you would like to sign up for Bitconnect or Control-Finance (a new competitor that is very new, and I would recommend because of that reason alone) then feel free to support me and use my referral links:

https://bitconnect.co/?ref=CryptoMath
https://control-finance.com/?ref=CryptoMath

For anyone using my referrals, I will return 30% of my referral bonus directly back to you.