EconBase
← All papers

Decomposing cryptocurrency high-frequency price dynamics into recurring and noisy components

Marcin Wątorek, Maria Skupień, Jarosław Kwapień, Stanisław Drożdż

arXiv 29 Jun 2023 · Finance — Trading · publishedChaos An Interdisciplinary Journal of Nonlinear Science (2023) · 11 citations (OpenAlex)

arXiv:2306.17095 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper investigates the temporal patterns of activity in the cryptocurrency market with a focus on Bitcoin, Ethereum, Dogecoin, and WINkLink from January 2020 to December 2022. Market activity measures - logarithmic returns, volume, and transaction number, sampled every 10 seconds, were divided into intraday and intraweek periods and then further decomposed into recurring and noise components via correlation matrix formalism. The key findings include the distinctive market behavior from traditional stock markets due to the nonexistence of trade opening and closing. This was manifest in three enhanced-activity phases aligning with Asian, European, and U.S. trading sessions. An intriguing pattern of activity surge in 15-minute intervals, particularly at full hours, was also noticed, implying the potential role of algorithmic trading. Most notably, recurring bursts of activity in bitcoin and ether were identified to coincide with the release times of significant U.S. macroeconomic reports such as Nonfarm payrolls, Consumer Price Index data, and Federal Reserve statements. The most correlated daily patterns of activity occurred in 2022, possibly reflecting the documented correlations with U.S. stock indices in the same period. Factors that are external to the inner market dynamics are found to be responsible for the repeatable components of the market dynamics, while the internal factors appear to be substantially random, which manifests itself in a good agreement between the empirical eigenvalue distributions in their bulk and the random matrix theory predictions expressed by the Marchenko-Pastur distribution. The findings reported support the growing integration of cryptocurrencies into the global financial markets.

Citation extraction

88
references
111
in-text mentions
89
distinct cited
2
self-citations
6,685
main-text words

appendix boundary found by none_found · 100% of the source is main text. Read the extracted text to check this.

Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1author author S. Drożdż, author J. Kwapień, \ and\ author M. Wątorek… (2023) ) NoStop self1.00094100%
2CoinMarketCap,\ @noop title CoinMarketCap,\ howpublished https://coi…0.87452100%
3author author M. Wątorek, author J. Kwapień, \ and\ author S. Drożdż… (2023) ) NoStop self0.81142100%
4author author P. R.\ Hansen, author C. Kim, \ and\ author W. Kimbrou… (2022) ) NoStop0.73732100%
5Binance,\ @noop title Binance,\ howpublished https://www.binance.com…0.64422100%
6author author S. Drożdż, author F. Gümmer, author A. Z.\ Górski, aut… (2000) ) NoStop0.64422100%
7author author S. Drożdż, author J. Kwapień, author F. Grümmer, autho… (2001) ) NoStop0.64422100%
8author author D. G.\ Baur, author D. Cahill, author K. Godfrey, \ an… (2019) ) NoStop0.51121100%
9author author J. Kwapień, author M. Watorek, author M. Bezbradica, a… (2022) ) NoStop0.51121100%
*unmatched citation key *0.40511100%

Showing the top 10 of 89 scored citations. 1 of these could not be matched to a bibliography entry, so only the citation key is shown.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
12607.139160.40511