Researchers find cryptocurrency ‘signatures of maturity’ similar to equities market
A pair of computer science researchers recently published pre-print research indicating that the nascent cryptocurrency market is beginning to show a level of maturity similar to the traditional equities market.
Dubbed “Collective dynamics, diversification and optimal portfolio construction for cryptocurrencies,” the paper was written by Dr. Nick James, a fellow at the University of Melbourne’s Centre for Data Science, and Max Menzies, a professor at the Beijing Institute of Mathematical Sciences and Applications, Tsinghua University.
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The pair set out to determine what role cryptocurrency plays in portfolio diveristy and how the cryptocurrency market compares to the traditional equities market.
Their findings indicate that, while there remains some key differences between the two markets, cryptocurrency is beginning to show palpable and demonstrable signs of maturity:
The team used a study approach called collective dynamics to discern the mathematical properties — with particular focus on measuring interactions between groups of data called ‘hierarchical clustering' — underlying both the cryptocurrency and equities markets. In order to compare the two, they measured diversification spreads across respective portfolios.
Collective dynamics, diversification and optimal portfolio construction for cryptocurrencies.James, Menzies:https://t.co/XOqDmFTpNx pic.twitter.com/gnN2PVnx2l
Both markets showed similar hierarchical clustering. The study authors also state there's evidence for "the existence of a ‘best value’ cryptocurrency portfolio.”
According to the researchers, by comparison, cryptocurrency may even offer a lower complexity threshold for
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