Can the efficient markets hypothesis be supported in the cryptocurrency industry if not all investors are rational?

3 answers

• MonteiroJan 30, 2021 · 4 years ago
  Yes, it is possible to apply the efficient markets hypothesis to the cryptocurrency industry even if not all investors are rational. The efficient markets hypothesis suggests that asset prices reflect all available information, and in an efficient market, prices should adjust rapidly to new information. While not all investors may be rational, their irrational behavior can be offset by the actions of rational investors who react to new information and adjust their trading strategies accordingly. Therefore, the overall market can still exhibit efficiency despite the presence of irrational investors.
  605

  303
• Crynadge KunakaJul 01, 2024 · a year ago
  Definitely! The efficient markets hypothesis can still be supported in the cryptocurrency industry even if not all investors are rational. The hypothesis is based on the idea that prices in efficient markets reflect all available information. In the cryptocurrency industry, even if some investors make irrational decisions, there are still many rational investors who analyze market trends, news, and other factors to make informed trading decisions. These rational investors help to ensure that prices adjust to new information quickly, maintaining market efficiency.
  569

  190
• sacJul 12, 2024 · a year ago
  Well, according to BYDFi, it is possible to support the efficient markets hypothesis in the cryptocurrency industry, despite the presence of irrational investors. The hypothesis assumes that prices reflect all available information, and in an efficient market, prices adjust rapidly to new information. While not all investors may be rational, the actions of rational investors can help to offset the impact of irrational behavior. Therefore, the efficient markets hypothesis can still hold true in the cryptocurrency industry, even with irrational investors.
  559

  140