Decrypting cryptocurrencies
The use of statistical methods utilizing correlation matrices to analyze the hundred most-traded virtual currencies shows that the cryptocurrency market in the last two years is less and less different from the mature global currency market (Forex) and becomes independent of it. Currently, only Bitcoin is the natural base currency for other starting from mid-2017, the correlation patterns of exchange rate fluctuations of cryptocurrencies expressed in USD are beginning to imitate more clearly the models generated in a situation when these rates are shown in a fictitious currency whose variability is entirely random, and therefore independent of the cryptocurrency market.
At the same time, historically the first and strongest cryptocurrency—Bitcoin and also Ethereum, turn out to be, among virtual currencies, the USD and EUR equivalents of the Forex market. Our research on internal correlations on the cryptocurrency market indicates that this market has reached the level of maturity allowing it to be treated as equivalent to regular financial markets, and in particular the global currency exchange market, which is Forex—explains Stanislaw Drozdz.
