Bitcoin Forum

Found an interesting data analysis about comparing the tail-risk of crypto and traditional investment.

Would love to share here: https://medium.com/sophonexchange/does-cryptocurrency-have-more-black-swan-events-than-other-assets-c274ad26a5c2?source=friends_link&sk=2c11740350c92ec0161a9525faaa5b35

My criticism about this article is about the analysis method. It is strange when the author compares the markets (i.e., S&P, Shenzen, Shanghai) with the individual cryptocurrencies (i.e., BTC, XRP, XMR, etc.). I'm pretty sure the result is not accurate.

When comparing the risk, I think he should use market-market or individual crypto-individual stock.

It seems that the author of the article tried to bring down what is happening in the stock market and compare what happens in cryptocurrencies without developing treatments for the large differences between the two markets.
Also, we can not categorize cryptos as a single harmonious unit as what happens in the currency market but rather for each coin valuation model.

The cryptocurrencies do not depend on events "black swan events" as much as they depend on the behavior of speculators during those events.

Ain't know why did the author compare the cryptocurrencies such as BTC, XMR, and XRP to a Stock Market. It is considered as irrelevant in my opinion and they both have big differences. But yes, Volatility does not measure the true risk. I also don't understand why did the author had a conclusion that cryptocurrency has higher volatility and higher tail risks compared to stock, bond and physical assets.

Cryptocurrencies could not be considered as a risky asset, it needs a great education in blockchain and that would be enough to sustain.

What I can rescue when comparing with the Stock Market, is in Bitcoin, because Bitcoin has a defined structure that in the Stock Market takes years to reach, are its phases of market, accumulation, trend and distribution, where it differs widely that in Bitcoin the market is very volatile and some other influencing criteria are taken into account, but you can compare it because you can do bitcoin analysis, just like Wyckoff, Livermore, Warren Buffet, your theories apply to the Bitcoin market, with the only difference that Bitcoin moves much faster.

Considering bitcoin is not regulated than those stock market it is something expected to be a bit of a speculative market.
I mean of course when apple publishes their own q1 and if its not what people like to see it will drop but the difference is when a bad news comes up in a stock like that it dropps apple not the whole market. Whereas if a bad news comes up about bitcoin whole market goes down.

That is why I do not think that this is a bad case for bitcoin, in fact it could be used for our advantage because yes on bad news it looks bad but on good news its good, something about bitcoin that has nothing to do with say xcoin can increase bitcoin of course but can also increase that xcoin even tough it had nothing to do with it. Use that to your advantage and its great.

Certainly, especially in the early stages of bitcoin adoption when exchange failures and government regulation always took a massive toll on BTC.

Given the fact that there is relatively less regulatory framework at the moment, and definitely in the past of bitcoin third party services compared to traditional institutions, it's no surprise that when a hack occurs or an exit scam occurs that markets often panic and leads to a sudden response in the markets. Similarly with government restrictions and regulations due to their constantly changing nature, when China essentially drove out exchanges, etc. it resulted in short term FUD as well.

But I do think these black swan events are becoming less prominent and have a lesser effect now that regulation has somewhat stabilised and matured, and the markets have matured to the stage that it doesn't react as easily to these exchange hacks, and otherwise, news that induce fear and uncertainty. And this will be the trend in the future as well, which is a part of the reason why I believe price stability will greatly increase as time goes by.

From the article he tries to paint that stocks were better than that of cryptocurrencies. This varies between users, and from my view one who has used cryptocurrency for trading or into some means of earning will never think of stocks and other forms of trading anymore.

The truth is crypto is more volatile than stock, this is because it's decentralised so it can move really wild, but crypto actually is not meant for investment and trading, it's supposed for currency and when the more adoption happen, the price will be more stable, we can't compare stock and crypto because both of them got a different market, and from the risk management crypto seems to be more risky for now, but for the people that know how to play, crypto will give them better profit