A theory that states that information is a critical determinant for financial markets and the price of assets.
The efficient market hypothesis (EMH) is a simple theory that states that information about the price dynamics of assets determines the direction that a financial market takes. The hypothesis plays a vital role in advanced trading circles as it emphasizes the usefulness of historical data and analysis in decision-making. Thus, the theory highlights the difficulty in beating the market without paying attention to available information on asset prices and other market characteristics.
In the world of blockchain networks and crypto exchanges, EMH serves as a motivating factor for traders to use information efficiently and make decisions based on this analysis.