Bitcoin is a kind of cryptocurrency that was first introduced to the public in 2009. But, while a lot of people are quite happy to collect and use Bitcoin, others, particularly investors, are not so keen. That being said, there are a lot of people out there working to change the stigma that’s associated with Bitcoin.

A recent analysis conducted at the Institute of Nuclear Physics of the Polish Academy of Sciences (IFJ PAN) shows how people are being won over to accept the first and most popular cryptocurrency as a standard form of currency. All new emerging financial markets face some form of skepticism, to begin with, so it’s of no real surprise that people were a little wary at first.





But the analysis showed that during 2012 and 2018 people’s confidence in Bitcoin rose. After the first two years, “the rates of return fluctuated according to the inverse cubic law,” says Professor Stanislaw Drozdz of IFJ PAN, Cracow University of Technology. So the researchers then turned to look at the volatility of rates of return instead.

At the moment, the Bitcoin market is showing signs of returns that aren’t correlated, which is the same as most mature global markets. Time correlations often appear in more subtle forms such as in volatility clustering. This is when the varying range of size being studied remains relatively constant for a certain length of time, while it’s determining the size of the cluster. Then, the range changes to a much bigger or smaller range than before. And so on, and so forth.

Volatility clustering is closely linked with a system’s reluctance to change trend. This reluctance is known as the Hurst exponent. With a Hurst value equal to nearly 0.5, the Bitcoin market is considered to be one with a high reputation.





“One of the more sophisticated features signaling the maturity of a market is the multifractal nature of its characteristics,” says Prof. Drozdz. “Multifractal analyses reveal dependencies existing in many scales. In the case of the Bitcoin, we detected multifractality in the functions of fluctuations in rates of return, particularly evident in the last six months of the examined period.”

These were the same results seen across the board in both regular, mature markets and bond 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,” says Prof. Drozdz. He also predicts it won’t be too long before other cryptocurrencies go through a similar transformation.





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