A research report published by a team of European scientists argues that Bitcoin and crytocurrency market in general are experiencing a stage of expedited maturity, which will soon permit them to become dependable alternatives to traditional financial market.
In July 2018, the research report was published in the issue of Chaos: An Interdisciplinary Journal of Nonlinear Science. The scientific magazine is published by the American Institute of Physics (AIP).
The above discussed research report titled “Bitcoin market route to maturity? Evidence from return fluctuations, temporal correlations, and multiscaling effects,” was prepared by the Polish Academy of Sciences in Krakow. The report presents a bullish outlook for cryptocurrencies.
The report claims that Bitcoin followed trends that are strikingly similar to other traditional markets, including those of other fiat currencies, despite experiencing a substantial period of accelerated growth.
The studies indicates that crypto market price movements followed the rules laid down by Inverse Cubic Law, which establishes the correlation between trading activity, price fluctuations and other factors to determine the stability of a market:
“Initially, the graphs we got were a bit crooked, which did not augur anything promising …However, when we took a closer look at the data, suddenly it turned out that this crookedness originated from the first two years of the analyzed period, that is, from the time when the market was just starting to shape itself …Later on, the rates of return fluctuated according to the inverse cubic law.”
Furthermore, the researchers explained that Bitcoin is also exhibiting characteristics comparable to that of other traditional markets of superior maturity and poise. As an example, the researchers point out that the price movement is in accordance with the projections created by the formulas and analogous to the stability of stock, Forex, oil and even bond market.
“In the case of Bitcoin, we detected multifractality in the functions of fluctuations in rates of return, particularly evident in the last six months of the examined period. This was of the same type as for regular, mature markets, such as the stock, dollar, oil or bond markets.”
The issue of market volatility has been one of the key contentions used by skeptics to suggest that cryptocurrencies cannot be legitimate substitutes for fiat money, but the unbiased research has given a precise view that can offset such conclusions.
“The most important statistical parameters of the Bitcoin market indicate very clearly that for many months now it has met all the important criteria of financial maturity. It seems that in the case of other cryptocurrencies it will be possible to expect a similar transformation. If this happens, the world’s largest market, the Forex market, can look forward to very real competition.”
