Bitcoin may actually resemble the established financial assets in terms of its price dynamics

Outside observers may find a lot of weird phenomena at cryptocurrency markets. It is enough just to point at projects such as Tron and Bitcoin SV having higher market capitalizations than Cardano. Nonetheless, at least as far as the most important crypto asset, BTC, is concerned, a recent publication by reputable researchers may suggest that it is becoming a more mature financial asset.

Scientists from the Institute of Nuclear Physics of the Polish Academy of Sciences (IFJ PAN) in Cracow have recently published a paper in the prestigious journal Chaos: An Interdisciplinary Journal of Nonlinear Science analyzing BTC prices from 2012 to April 2018. Their analysis suggests that after the first two years in the period under analysis, BTC prices started showing the same features as more traditional financial assets. These features are rates of return describable by the inverse cubic law, the absence of correlation between the signs of returns, the reluctance of the market to change trend, and multifractality. The pre-print text of the paper is available on arxiv.

The potential major caveat about this study may be that it focused on a multitude of very short time periods, and that the massive cycles of price increases followed by dramatic downturns still make BTC suspect. However, this may stem not from the problems of BTC market functioning but from the very high uncertainty associated with the asset itself.  

Share

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *