Simple model. Each domestic economy has a bank network that is partially inter-mediated by bitcoin exchanges. Then we ask what happens when a central bank portends negative news?
The news is picked up by insiders who buy bitcoin from a large collection of traders with asymmetric knowledge. Funds are thus dispersed: larger flows from fewer accounts dispersed to smaller flows to more accounts. It really look as exactly like central bank inter-mediation with free entry and exit properties of bitcoin.
A change in economic reality in a domestic economy will show up as a skew in a running Huffman encode of the transaction from domestic banks to bitcoin, the same stuff I did with SP500 a few times. The skew is a measure of liquidity, second derivative of S/L. More skew, less liquidity. Bitcoin simply makes the math easy, due to free entry and exit. It always offers that first half step ahead of any other method.
In price, we want a linear approximation, the bitcoin price in a domestic currency expanded via the relative changes of the other currency skews, we need to compare relative liquidity, skew ratios. But skew ratios should be second acceleration in price ratios, as both generators are mapped to the same X integer axis. We are finding homogeneos generators that can be 'ratioed'.
Start with market price, aggregated in all of three major currencies is enough.Decompose it into relative changes per transactions on the X axis after finding generators for a complete sequence (this is important, a longer view back, big data effect) to work with. Add shit up.
Two steps, find the stable trade patterns, compute sustainable queues models in each of the specialized currency trades. Step two: Then you have a map, bitcoin changes per integer index and your can do Econ 10.
From the traders point of view. The bitcoin market has whale effects, (up and down) when a smaller group of domestic insiders know something. Then as the central banks meander toward some stability, a slow gain accrues back to central bank concentration. The queue graph tends to balanced. This is chart making done with theory of quantization.
Central banks will never regulate this effect, it has free entry and exit for very little cost. Central banks should just play the game, keep bitcoin on the portfolio. Then prohibit bitcoin use in domestic transactions, forcing the bitcoin exchanges to specialize in currency exchange. This is Pareto efficient, and it bit coiners don't like it they are free to create stable coins, derived from bitcoin. You still have sandbox freedom. I have been on central bank side for a while, I need them for MMT meetup.
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