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Study: Shorting Difficulties and Heterogeneous Beliefs Drive Speculative Cryptocurrency Prices

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Mark Mason

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Study: Shorting Difficulties and Heterogeneous Beliefs Drive Speculative Cryptocurrency Prices

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Wang Chun Wei, Ph.D. and a finance lecturer at the University of Queensland in Australia, argues in a new working paper that a significant portion of cryptocurrency values come from the heterogeneous belief that investors can sell a coin to another individual at a higher price.

Wei describes the ability to sell to another party at a higher price as the resell option hypothesis and describes how this could lead to mispricing of cryptocurrencies. To better discern between intrinsic and speculative value, Wei focuses on ‘joke’ and ‘scam’ coins as a natural experiment since they “cannot be directly used as a medium of exchange, and nor do they provide the holder with any claims to future cashflows”. He then examined the “empirical relationship between turnover, mispricing and volatility” for mainstream, joke, and scam coins.

Read more - https://www.dashforcenews.com/study...iefs-drive-speculative-cryptocurrency-prices/
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