What are the criticisms and limitations of Efficient Market Hypothesis (EMH) in the context of cryptocurrency markets?

1 answers

• DinNov 25, 2025 · 3 months ago
  In the context of cryptocurrency markets, the Efficient Market Hypothesis (EMH) has been subject to criticism and limitations. One of the main criticisms is the extreme volatility observed in cryptocurrencies, which cannot be fully explained by EMH. The cryptocurrency market is highly speculative and driven by emotions and market sentiment, leading to significant price fluctuations that are not in line with the efficient market theory. Additionally, the lack of regulation and oversight in the cryptocurrency industry allows for market manipulation and insider trading, further challenging the assumptions of EMH. Moreover, the decentralized nature of cryptocurrencies and the influence of social media platforms introduce additional complexities that EMH fails to account for. Overall, while EMH may provide insights into traditional financial markets, it falls short in explaining the dynamics and unique characteristics of the cryptocurrency market.
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