{"id":11585,"date":"2023-04-20T19:54:46","date_gmt":"2023-04-20T19:54:46","guid":{"rendered":"https:\/\/cryptoheretostay.com\/?p=11585"},"modified":"2023-04-20T19:54:47","modified_gmt":"2023-04-20T19:54:47","slug":"researchers-find-cryptocurrency-signatures-of-maturity-similar-to-equities-market","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=11585","title":{"rendered":"Researchers find cryptocurrency \u2018signatures of maturity\u2019 similar to equities market"},"content":{"rendered":"<script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script>\n<p>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.\u00a0<\/p>\n<p>Dubbed \u201cCollective dynamics, diversification and optimal portfolio construction for cryptocurrencies,\u201d the paper was written by Dr. Nick James, a fellow at the University of Melbourne\u2019s Centre for Data Science, and Max Menzies, a professor at the Beijing Institute of Mathematical Sciences and Applications, Tsinghua University.<\/p>\n<p><strong>Related: <em>What\u2019s next for EU\u2019s crypto industry as European Parliament passes MiCA?<\/em><\/strong><\/p>\n<p>The pair set out to determine what role cryptocurrency plays in portfolio diveristy and how the cryptocurrency market compares to the traditional equities market.<\/p>\n<p>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:<\/p>\n<p>\u201cOverall, we have uncovered nuanced similarities and differences between the cryptocurrency and equity markets. These mathematical properties signal increased signatures of maturity in the collective dynamics and diversification benefit of different portfolio spreads.\u201d<\/p>\n<p>The team used a study approach called collective dynamics to discern the mathematical properties \u2014 with particular focus on measuring interactions between groups of data called \u2018hierarchical clustering&#8217; \u2014 underlying both the cryptocurrency and equities markets. In order to compare the two, they measured diversification spreads across respective portfolios. <\/p>\n<p lang=\"en\" dir=\"ltr\">Collective dynamics, diversification and optimal portfolio construction for cryptocurrencies.<\/p>\n<p>James, Menzies:https:\/\/t.co\/XOqDmFTpNx pic.twitter.com\/gnN2PVnx2l<\/p>\n<p>\u2014 arXiv art (@arXiv_art) April 19, 2023<\/p>\n<p>Both markets showed similar hierarchical clustering. The study authors also state there&#8217;s evidence for &#8220;the existence of a \u2018best value\u2019 cryptocurrency portfolio.\u201d <\/p>\n<p>According to the researchers,\u00a0 by comparison, cryptocurrency may even offer a lower complexity threshold for diversification:<\/p>\n<p>\u201cRetail investors with limited ability to hold complex portfolios of many cryptocurrencies may be sufficiently diversified with a relatively small portfolio across just 16 cryptocurrencies.\u201d<\/p>\n<p>The study authors note that cryptocurrency has been called \u201can immature market, characterized by significant swings in volatility and occasionally described as lacking rhyme or reason,\u201d but the research appears to indicate otherwise.<\/p>\n<p>Ultimately, the study concludes that the cryptocurrency market is showing signs of maturity, but it&#8217;s not quite on par with the equities market just yet.<\/p>\n<p>The researchers raise the issue of opaque underlying business functions related to cryptocurrencies, stating that related business cycles are \u201cmuch less clear\u201d than in the equities market. They also note a need for \u201cthe development of better understood and\u00a0widely disseminated cryptocurrency investment principles.\u201d<\/p>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cointelegraph.com\/news\/researchers-find-cryptocurrency-signatures-of-maturity-similar-to-equities-market\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>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.\u00a0 Dubbed \u201cCollective dynamics, diversification and optimal portfolio construction for cryptocurrencies,\u201d the paper was written by Dr. Nick James, a fellow at the University of Melbourne\u2019s [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":11586,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[2],"tags":[],"class_list":["post-11585","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bitcoin-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/11585","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11585"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/11585\/revisions"}],"predecessor-version":[{"id":11587,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/11585\/revisions\/11587"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/11586"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}