Clustering the Cryptocurrency Market Using Pricing Dynamics

This research aims to analyze the dynamics of the cryptocurrency market using clustering analysis methods to categorize cryptocurrencies based on their market behavior and technical characteristics. Within this study, data on the top 100 cryptocurrencies by market capitalization in 2023 are analyzed, covering the period from 2019 to 2023. To identify market trends, indices such as the Relative Strength Index (RSI), volatility indices, stability indices, and other technical indicators are utilized. Subsequently, clustering methods, including K-means and hierarchical clustering, are applied to delineate distinct clusters within the cryptocurrency market. The obtained results reveal a clear market structure wherein each group of cryptocurrencies exhibits unique characteristics concerning various technical indicators. These findings hold significant implications for investors, researchers, and regulators, providing valuable research data necessary for effective portfolio diversification, risk management, and a deeper understanding of the complexities and peculiarities of the cryptocurrency market.