Pandemic Has Accelerated Crypto Market’s Transformation Into Commodity Market - Research
The cryptocurrency market is beginning to consolidate and is increasingly similar to a commodity market, with an increased correlation between cryptos coinciding with the early stages of the COVID-19 pandemic, according to researchers from the Institute of Nuclear Physics of the Polish Academy of Sciences (IFJ PAN).
Statistical analyses carried out by these researchers suggest that the global market is maturing. From the point of view of statistical analysis, it is becoming more and more evident that the crypto market can be an alternative to investments in other financial markets, the scientific institution said in a statement that summarizes the findings presented in the paper.
Owing to crypto, for the first time in history, scientists can perform a full, quantitative analysis that tracks the dynamics of a financial market “from its inception to virtually full maturity,” said Stanisław Drożdż, Ph.D., Professor at the IFJ PAN and the Cracow University of Technology, who co-authored the paper.
The research answers the question of potential correlations between particular cryptos:
The paper studies a high-frequency time series of price returns representing 80 cryptos that were the most actively traded on major crypto exchange Binance, with a focus on the detrended cross-correlation structure of the crypto market at different time intervals.
Researchers admit that their analysis comprises "only a small fraction of all traded cryptocurrencies, whose number exceeds 7500,” but they claim that “the less well-known and less capitalized a cryptocurrency is, the less liquid and less reliable are the related data." Therefore, they argued, restricting their analysis to the most capitalized cryptocurrencies was "crucial."
IFJ PAN’s
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