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Disorder unleashes panic in bitcoin dynamics


Alberto Javarone, Marco; Di Antonio, Gabriele; Valerio Vinci, Gianni; Cristodaro, Raffaele; Tessone, Claudio; Pietronero, Luciano (2023). Disorder unleashes panic in bitcoin dynamics. Journal of Physics: Complexity, 4:045002.

Abstract

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.

Abstract

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.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Informatics
08 Research Priority Programs > Social Networks
Dewey Decimal Classification:000 Computer science, knowledge & systems
Scopus Subject Areas:Physical Sciences > Information Systems
Physical Sciences > Computer Science Applications
Physical Sciences > Computer Networks and Communications
Physical Sciences > Artificial Intelligence
Scope:Discipline-based scholarship (basic research)
Language:English
Date:17 October 2023
Deposited On:16 Feb 2024 10:37
Last Modified:30 Apr 2024 01:51
Publisher:IOP Publishing
Number of Pages:45002
ISSN:2632-072X
OA Status:Gold
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1088/2632-072X/ad00f7
  • Content: Published Version
  • Language: English
  • Licence: Creative Commons: Attribution 4.0 International (CC BY 4.0)