kaal:claim:3396522-021

Extreme illiquidity combined with the herd mentality of crypto investors systematically benefits speculators, because it lets apparent scarcity materialize out of nowhere precisely when investors are about to decide, prompting misinformed buy and sell decisions.

Source quote, verbatim

The very high illiquidity of the cryptocurrency market in combination with the herd mentality of crypto investors benefits speculators because it allows scarcity to appear out of nowhere including for investors who are about to make an investment decision.

From

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019), IV. Stable Cryptocurrencies, 5. Transforming Cryptocurrency Market Structure, p. 33
https://ssrn.com/abstract=3396522 · source PDF

Cite as

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522

Holds when

holds in deeply illiquid markets where speculators control supply

Classification

mechanismsupport: arguedfailure: speculator-informational-advantagefamily: information-asymmetrydefirisk-and-incentivesdisclosure

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