Is the Bitcoin market efficient? A literature review

Abstract

This paper presents a documentary research on the market behavior of Bitcoin with respect to market efficiency and the existence of speculative bubbles. To this end the paper analyses 25 journal articles to answer the following research question: Is the Bitcoin market efficient? Based on Eugene Fama's Efficient Market Hypothesis (EMH), the selected articles are classified into two groups: the first group contains articles that support and potentially accept the EMH; the second group includes articles that refute or reject this hypothesis based on different empirical evidence of financial bubbles within the Bitcoin market. The two groups indicate that by 2021 there is no crystal-clear consensus among scholars and financial analysts in terms of efficiency. Nevertheless, far more articles reject the EMH than support it, concluding that the Bitcoin market is prone to develop speculative bubbles. Furthermore, due to the high volatility documented by both groups, users and future investors are advised to consider not only the potential financial gains that the most popular cryptocurrency may offer, but its numerous risks as well. (English) [ABSTRACT FROM AUTHOR]