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Developer Collaborations Affect Cryptocurrency Price Correlation
Cryptocurrency prices may tend to correlate with each other thanks to developers.
If research stands the test of time, the community will get a new indicator of price movement.
On average, prices for correlated assets begin to show activity one month after the start of development.
Collaborations between cryptocurrency developers are affecting the price activity of digital assets, according to new research.
A group of analysts from the University of Trent and Copenhagen, as well as a number of other educational institutions, published a report according to which the joint work of cryptocurrency developers on the same projects strengthens the price correlation.
Analysts researched daily price action, trading volume and market cap from three different sources: CoinGecko, CryptoCompare and CoinMarketCap.
It turned out that if the developers worked together on some project, then the cryptocurrencies, on which they worked separately, began to rise in price almost identically after a few months..
“Our results point to a clear link between co-development of cryptocurrencies and their market behavior..
More broadly, our work is highlighting a so far overlooked code-based systemic dimension of ecosystem transparency, and we expect it to be of interest to researchers, investors and regulators, ”the report says..
According to the report, many open source cryptocurrency assets contain similar internal algorithms and architectural principles regarding a number of aspects, such as security and availability..
A group of analysts investigated the relationship between development and price activity of over 290 open source cryptocurrencies hosted on GitHub.
Correlation with the market
Previously BeInCrypto editors wrote, that due to the collapse of Bitcoin by more than 30% per day, the price of the largest cryptocurrency by capitalization began to correlate with the American S index&P 500.
Later, many were caught off guard by another unexpected behavior of bitcoin, when the cryptocurrency began to show similarities with the precious metal..
However, a group of experts led by Gabor Gurbach, director of strategic digital assets management at VanEck investment company, believes that although the correlation of bitcoin with precious metals in the short term will remain quite high, in the future, cryptocurrency will look less and less like gold..
Meanwhile, the head of the Galaxy Digital cryptocurrency bank, Mike Novogratz, announced that he would leave the cryptocurrency market if Bitcoin does not resume growth this year..
What do you think? Can the price of a cryptocurrency depend on the code base of the project, or is the market manipulated only by whales? Share with us with our thoughts in comments.