Disorder unleashes panic in bitcoin dynamics

The behaviour of Bitcoin owners is reflected in the structure and the number of bitcoin transactions encoded in the Blockchain. Likewise, the behaviour of Bitcoin traders is reflected in the formation of bullish and bearish trends in the crypto market. In light of these observations, we wonder if hu...

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Bibliographic Details
Published in:Journal of physic, complexity complexity, 2023-12, Vol.4 (4), p.45002
Main Authors: Alberto Javarone, Marco, Di Antonio, Gabriele, Valerio Vinci, Gianni, Cristodaro, Raffaele, Tessone, Claudio J, Pietronero, Luciano
Format: Article
Language:English
Subjects:
bitcoin
blockchain
disorder
panic selling
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Summary:The behaviour of Bitcoin owners is reflected in the structure and the number of bitcoin transactions encoded in the Blockchain. Likewise, the behaviour of Bitcoin traders is reflected in the formation of bullish and bearish trends in the crypto market. In light of these observations, we wonder if human behaviour underlies some relationship between the Blockchain and the crypto market. To address this question, we map the Blockchain to a spin-lattice problem, whose configurations form ordered and disordered patterns, representing the behaviour of Bitcoin owners. This novel approach allows us to obtain time series suitable to detect a causal relationship between the dynamics of the Blockchain and market trends of the Bitcoin and to find that disordered patterns in the Blockchain precede Bitcoin panic selling. Our results suggest that human behaviour underlying Blockchain evolution and the crypto market brings out a fascinating connection between disorder and panic in Bitcoin dynamics.
ISSN:2632-072X
2632-072X
DOI:10.1088/2632-072X/ad00f7