HomeBitcoin NewsBitcoin as Stable as Dollar and Oil Markets, Says New Research

Bitcoin as Stable as Dollar and Oil Markets, Says New Research


New research published in a leading scientific journal says that Bitcoin has matured and is more reliable than before.

A Vote of Confidence for Bitcoin

Cryptocurrencies are considered as a highly volatile asset class. Bitcoin price in 2017 rose from $1,000 in January to nearly $20,000 in December before crashing back to $5,800 in 2018. Between these price points, there were multiple upward and downward price swings. Many investors have kept away from crypto markets given these wild swings.

However, recently published research in a renowned scientific journal, Chaos: An Interdisciplinary Journal of Nonlinear Science, portrays Bitcoin in a positive light, arguing that the world’s foremost cryptocurrency has matured. The research paper is titled “Bitcoin market route to maturity? Evidence from return fluctuations, temporal correlations, and multiscaling effects” and is authored by researchers at the Henryk Niewodniczański Institute of Nuclear Physics (IFJ PAN) of the Polish Academy of Sciences in Kraków.

Bitcoin price analysis

Analysis Conducted

The researchers studied Bitcoin price movement over the last six years (from 2012 through April 2018) and concluded that key statistical features of the digital asset are similar to those of established financial markets like fiat currencies, stocks, and commodities.

After analyzing graphs of Bitcoin’s price, the authors said:

Initially, the graphs we got were a bit crooked, which did not augur anything promising. But 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 [a statistical method to study financial market maturity].

Conclusions from the Study

Lead researcher Prof. Stanislaw Drozdz says:

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.

The paper itself concludes:

[In] spite of its virtual nature and novelty, the Bitcoin market has recently and rapidly developed the statistical hallmarks which are empirically observed for all ‘mature’ markets like stocks, commodities or Forex. It appears plausible that other cryptocurrencies will follow the same trajectory.

Going by the findings of this interesting study, it can be assumed with confidence that we will experience less volatility in the price of Bitcoin going ahead. In fact, the finding correlates well with the actual price action over the last six months (the study looked at data until April 2018).

Do you agree with the conclusions of this research paper? Let us know in the comments below.

Images courtesy of Shutterstock.


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