The evolution of the cryptocurrencies market: A complex networks approach

摘要

In this paper, the price synchronization in the cryptocurrencies market is investigated, using descriptive metrics and a novel methodology both from the area of Complex Networks. The study is conducted for three consecutive years, 2016-2018. In doing so, the cross-correlation-based networks of the cryptocurrencies under examination are created and subsequently their properties for each year are analyzed and compared. The novel Threshold Weighted-Minimum Dominating Set (TW-MDS) methodology is employed in order to identify the so-called dominant cryptocurrencies for each year. In this framework, a node is identified as dominant when it can adequately describe the collective behavior of its relevant neighborhood. The empirical results provide strong evidence of an increased price synchronization. One interesting finding is that, contrary to what may be expected, the cryptocurrencies that are identified as dominant are not always the most popular that are usually the ones with the highest capitalization (such as Bitcoin or Ethereum). (C) 2020 Elsevier B.V. All rights reserved.