Financial market efficiency describes the degree to which asset prices reflect all available information. In an efficient market, it is theoretically impossible to consistently achieve excess returns through trading strategies. This concept is central to understanding price discovery and information dissemination within any financial system, including nascent digital asset markets.
Context
Discussions about financial market efficiency in the crypto space often revolve around the rapid price movements and information arbitrage opportunities that can arise. The presence of speculative trading, information asymmetry, and varying levels of regulatory oversight contributes to ongoing debates about whether digital asset markets exhibit strong, semi-strong, or weak-form efficiency. Analyzing these dynamics is key to comprehending market behavior, the effectiveness of investment strategies, and the potential for market manipulation.
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