The bitcoin market is globally efficient finds a paper presented at the 3rd International Conference of Applied Research in Management, Economics and Accounting.
As such, the price of bitcoin always fully reflects the information available about the assets and in line with the efficient market theory, bitcoin investors are considered to assume a rational role in their investments and to evaluate and price assets in the same way.
After much analysis of the data from 2017 to 2019 in regards to the dollar, euro and Brazilian Real, the authors state:
“According to the data and tests carried out, it can be seen that the efficiency of the cryptocurrency market is strong, since the last past values justify its net present value, and that the price balance occurs in a lag of only 60 minutes.”
In explaining the results, the authors say that “this evidence, of strong market efficiency, can be justified by the speed at which information flows within the world of cryptocurrencies, and also, by the market not having limited hours of operation, thus, news that occurs in Europe is easily and quickly impacted the price of the Brazilian market, since the operations do not have opening and/or closing and the information is conveyed in real time around the world.”
They further find that “the USD is the market driver, directing and aligning the rest of the systems and the market as a whole.”
That’s largely in part because trading volumes in dollars are far bigger than in any other currency, including the euro.
The overall result so suggesting that there is far less market manipulation in bitcoin, if at all more than in other markets, as it has strong market efficiency and rational actors in compatibility with the market efficiency theory.
That should pave the way further for institutional involvement in bitcoin investment as bitcoin matures to a new asset class.