Abstract
The crypto exchanges operate primarily on the internet, where the speed of information spreading is significant. Therefore, it is expected that there should be no significant differences among the individual exchanges concerning the same asset being traded. Prices should quickly reach comparable values on all stock exchanges, and they should return to equilibrium in a relative time frame. Hence, the investors, while making decisions on the selection of a cryptocurrency market, should be guided primarily by the exchange security considerations, its flexibility, availability of a product offer, and costs of order processing. The work aims to check whether virtual currency exchanges differ from each other in the context of directional movement, both in an upward and downward trend. To achieve the objective of the paper, we used Directional Movement Index, supported by the Directional Indicators, to compare the distribution of the strength of the directional movement across three different cryptocurrency exchanges (Bitstamp, Coinbase, Kraken) within the up and the downward price movement phase. The comparison is made based on the results of the non-parametrical tests such as Wilcoxon test, Hodges Lehmann test, Ansari-Bradley test, and Conover test. The results show that theoretically, the choice of a cryptocurrency exchange in an upward trend will cause no significant difference for an investor and its strategy. However, the choice of a stock exchange in a downward trend may have a substantial impact on the rates of return.
Highlights
The economics of the cryptocurrency market is problematic, and, still, unexplored
It should be remembered that negative information, concerning both cryptocurrencies and crypto markets, appear systematically, which in combination with the large variability of crypto-assets and situations, in which money deposited on stock exchanges are being stolen, causes a significant sense of uncertainty among investors and greater sensitivity to negative information, and fluctuations in rates, than is the case with traditional assets
Information on the distribution of the directional movement index, which indicates the strength of the directional movement on analyzed exchanges is vital for potential investors, who are wishing to shape their investment strategies in cryptocurrencies consciously
Summary
The economics of the cryptocurrency market is problematic, and, still, unexplored. The followers of cryptocurrencies stress many advantages like anonymity, lack of control, independence, versatility, as well as immense implementation potential. Some partisans perceive in cryptocurrencies, especially in bitcoin a successor of a global currency like the US Dollar. The market for cryptocurrencies is organized in a specific way. There is not one cryptocurrency market or exchange, where all cryptocurrencies are traded, but there are over 200 different active exchanges. The cryptocurrency market is not subject to such a restrictive controls and legal restrictions as traditional financial markets, which in combination with traded assets class means that investors are more likely to lose their assets due to hacker attacks on crypto exchanges but are sensitive to negative information about cryptocurrencies and legal attempts to limit their trade ((FSB, 2018))
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