Bitcoin is Mature to Compete With Global Forex Market

Bitcoin has met all the important criteria of financial maturity and could compete with the world’s largest forex market at some point, researchers at the Institute of Nuclear Physics of the Polish Academy of Sciences have claimed.

Their detailed statistical analysis of the Bitcoin market hinges on the observation that the digital currency was able to mature on its own based on the characteristics it integrally incorporated in the foundations of its own market. They believe it has grown to be considered structurally better than the real foreign exchange market which matured through a central bank or a government.

For Bitcoin, they found multifractality – structures in which, in order to see self-similarity, various fractal fragments have to be magnified at different speeds – 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, explains Prof. Stanislaw Drozdz. They added that the Bitcoin market, and possibly other cryptocurrencies, carry concrete potential of imminently becoming a regular market, alternative to the forex market.

Based on 1-min price changes recorded from 2012 to April 2018, the analysis was done on return distributions, volatility autocorrelation, Hurst exponents and multiscaling effects over chosen sub-periods. Over the months preceding April 2018, all the statistical indicators approach the features of hallmarking maturity.

The analysis was released when $13bln was reportedly wiped away from the crypto market as most commodities in the global market suffered a sharp downturn this week. Bitcoin’s value dropped by almost 7% hurting its reputation as a supposed safe haven when other commodities go red. The analysis also coincides with the hearing before the US Senate of renowned economist, Nouriel Roubini, and CoinCenter director of research, Peter Van Valkenburg, discussed the cryptocurrency and blockchain ecosystem. Roubini called Bitcoin “the mother or father of all scams and bubbles” and dubbed blockchain a “glorified database.”

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