Bitcoin Markets Comprise Imminent Alternative to Foreign Exchange

A report authored by researchers from the Henryk Niewodniczanski Institute of Nuclear Physics has found that Bitcoin is maturing. The report, courtesy of the Polish Academy of Sciences in Krakow, concludes that Bitcoin carries “concrete potential of imminently becoming a regular market” and “an alternative to the foreign exchange.”

Polish Researchers Seek to Assess Maturity of Bitcoin Markets

The study, which is “Based on 1-min price changes recorded since year 2012,” assesses “the fluctuation properties of the rapidly emerging Bitcoin market … over chosen sub-periods, in terms of return distributions, volatility autocorrelation, Hurst exponents, and multiscaling effects.”

“Since high-frequency price data are available since the beginning of trading,” the researchers argue that “Bitcoin offers a unique window into the statistical characteristics of a market maturation trajectory.”

“Statistical Irregularities” Only Identified During Bitcoin Markets’ Infancy

Professor Stanisław Drożdż, one of the researchers who worked on the study, stated: “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.”

Cryptocurrency Markets Will Pose “Very Real Competition” to Forex Markets

“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,” professor Drożdż concluded.