A pair of researchers from the University of Melbourne recently published research that indicated that the nascent market of cryptocurrency was about to show a level of maturity that was quite similar to the equities market.
The paper was written by Nick James and Max Menzies, and it was dubbed “Collective Dynamics, diversification, and optimal portfolio construction for Cryptocurrencies.” The pair had planned on determining what role cryptocurrency played in portfolio diversity and how the market of cryptocurrency compared to the traditional market of equities. The findings did indicate that, although there are certain key differences between the two markets, cryptocurrency is indeed showing some demonstrable and palpable signs of maturity.
University Of Melbourne’s Team Of Researchers Have Found Similarity Between Cryptocurrency And Equities Markets
The team from the University of Melbourne utilized a study approach called collective dynamics which was all about discerning the mathematical properties that were under both the equities and cryptocurrency market. To make a comparison, they also ended up measuring the diversification that spread across the respective portfolios.
Interestingly enough, both of the markets did show some very similar hierarchical clustering. The authors of the study went on to state that there was evidence for the existence of a cryptocurrency portfolio that would give the best value. As far as the researchers are concerned, the cryptocurrency could even offer a lower complexity threshold for diversification.
The study from the University of Melbourne also notes that cryptocurrency has been previously considered to be an immature market, which was characterized by multiple swings in volatility, as well as occasionally described as lacking both reason and rhyme. In the end, the study goes on to conclude that the market has been showing signs of maturity- but it is still not on par with the market of equities just yet.
