EconPapers    
Economics at your fingertips  
 

Cryptocurrency Time Series on the Binary Complexity-Entropy Plane: Ranking Efficiency from the Perspective of Complex Systems

Erveton P. Pinto, Marcelo A. Pires, Rone N. da Silva and S\'ilvio M. Duarte Queir\'os

Papers from arXiv.org

Abstract: We report the first application of a tailored Complexity-Entropy Plane designed for binary sequences and structures. We do so by considering the daily up/down price fluctuations of the largest cryptocurrencies in terms of capitalization (stable-coins excluded) that are worth $circa \,\, 90 \%$ of the total crypto market capitalization. With that, we focus on the basic elements of price motion that compare with the random walk backbone features associated with mathematical properties of the Efficient Market Hypothesis. From the location of each crypto on the Binary Complexity-Plane (BiCEP) we define an inefficiency score, $\mathcal I$, and rank them accordingly. The results based on the BiCEP analysis, which we substantiate with statistical testing, indicate that only Shiba Inu (SHIB) is significantly inefficient, whereas the largest stake of crypto trading is reckoned to operate in close-to-efficient conditions. Generically, our $\mathcal I$-based ranking hints the design and consensus architecture of a crypto is at least as relevant to efficiency as the features that are usually taken into account in the appraisal of the efficiency of financial instruments, namely canonical fiat money. Lastly, this set of results supports the validity of the binary complexity analysis.

Date: 2025-03
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2504.01974 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2504.01974

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().

 
Page updated 2025-04-05
Handle: RePEc:arx:papers:2504.01974