Technological Change and Market Conditions: Evidence from Bitcoin Fork

Abstract

This article examines the impact of technological changes to cryptocurrency—known as “forking” that triggers blockchain splits—on market conditions. Despite the explicit distinction in log return distributions between the two splitting blockchains, adopting new technology does not result in a disparity in market conditions: no significant difference exists in market efficiency and long-term market equilibrium between the two splitting blockchains. Technological changes accompanying market separation do not impede the underlying uniformity in market conditions. The findings suggest that mutual information flows linked to market liquidity explain the results between the new and old forks.

Exploring Calendar Effects in Bitcoin Returns: An Analysis of Market Efficiency

“…Shanaev and Ghimire (2022) found that cryptocurrency markets are less efficient than national stock markets, with predominantly irregular seasonality periodicity that cannot be reduced to conventional weekly, monthly, or annual cycles. Kim et al (2023) and Yi et al (2023) focused on the market capitalization and information discovery speed in the Bitcoin market. It highlighted the fast information circulation in the Bitcoin market, suggesting its efficiency and robustness against the predictability of future prices based on past performance.…”