Market price discovery is the process by which the economic value of an asset is determined through the interaction of buyers and sellers in a marketplace. In digital asset markets, this occurs through continuous trading activity, where supply and demand dynamics influence asset valuations. It reflects the collective assessment of an asset’s worth at any given moment.
Context
The efficiency and integrity of market price discovery in digital asset markets are frequently debated, particularly concerning liquidity fragmentation and potential for manipulation. Concerns exist regarding the impact of wash trading and concentrated holdings on accurate price formation. Regulatory efforts often aim to enhance market transparency to support more reliable price signals.
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