Asset Market Equilibria in Cryptocurrency Markets: Evidence from a Study of Privacy and Non-Privacy Coins
28 Pages Posted: 25 Jun 2019
Date Written: May 23, 2019
This paper explores whether asset market equilibria in cryptocurrency markets exist. In doing so, it distinguishes between privacy and non-privacy coins. Most recently, privacy coins have attracted increasing attention in the public debate as non-privacy cryptocurrencies, such as Bitcoin, do not satisfy some users’ demands for anonymity. Analyzing ten cryptocurrencies with the highest market capitalization in each sub-market in the 2016–2018 period, we find that privacy coins and non-privacy coins exhibit two distinct market equilibria. Contributing to the current debate on the market efficiency of cryptocurrency markets, our findings provide evidence of market inefficiency. Moreover, the asset market equilibrium of privacy coins appears to be unrelated to the market equilibrium in the non-privacy coin markets, implying that the privacy coin market is emerging as a distinct asset market among cryptocurrency markets.
Keywords: Cryptocurrency, Bitcoin, Privacy Coins, Non-Privacy Coins, Market Equilibria
JEL Classification: G12, G14
Suggested Citation: Suggested Citation