I guess we need to make a distinction between the blog post and the Gary Smith post it links to here.
Gary smith (the person I think you're referring to having spent a career in this) says this:
>The market manipulation, the irrational price gyrations, and the enthusiasm of so many investors for investing in bitcoin (and other cryptocurrencies) is ample evidence that market prices are not invariably equal to intrinsic values.
I entirely agree. A perfectly efficient market should follow Benford's law given enough data.
It's the blog post by Andrew that I think totally misses the point. He leaps from inefficiency which could be market manipulation to this:
>I saw this and I was like, well, yeah, isn’t all bitcoin use either crime or manipulation? But then I realized, no, that’s not all of it. Some bitcoin playas are motivated by politics, some by fomo, some are doing anti-virtue signaling...
And never considers the fact that the world is full of people who feel very different paying $100.00 vs $99.99
> the world is full of people who feel very different paying $100.00 vs $99.99
Agree, though that effect is not constrained to Bitcoin. Retail orders, for instance, follow Benford's law. This is despite well-documented psychological biases towards e.g. certain digits, whole numbers, round numbers, et cetera [1]. Benford's law [2] derives from deeper mechanics.
As you point out, however, a better control would have been not all prices in public stocks, but retail orders.
Liquid retail stocks follow Benford's law because there is a notion of intrinsic value from the company and an army of quant traders trying to exploit any price inefficiency caused by the retail traders.
With cryptocurrency, the market is less mature and the intrinsic value largely comes from people believing in its value. So really, it would be surprising if we didn't see some Benford's law anomalies associated with people picking numbers.
Anyway, thanks for the discussion; the links above have given me stuff to chew on and calmed the red mist after I got so many drive-by downvotes.
Gary smith (the person I think you're referring to having spent a career in this) says this:
>The market manipulation, the irrational price gyrations, and the enthusiasm of so many investors for investing in bitcoin (and other cryptocurrencies) is ample evidence that market prices are not invariably equal to intrinsic values.
I entirely agree. A perfectly efficient market should follow Benford's law given enough data.
It's the blog post by Andrew that I think totally misses the point. He leaps from inefficiency which could be market manipulation to this:
>I saw this and I was like, well, yeah, isn’t all bitcoin use either crime or manipulation? But then I realized, no, that’s not all of it. Some bitcoin playas are motivated by politics, some by fomo, some are doing anti-virtue signaling...
And never considers the fact that the world is full of people who feel very different paying $100.00 vs $99.99