Is asymmetric information driving crypto’s wild price swings?
It has long been believed that investors possessing inside knowledge help drive cryptocurrencies’ price volatility, and a number of academic papers have been published on this topic. This is why Coinbase’s intention to regularly publish in advancea catalog of tokens being assessed for listing on its prominent trading platform is noteworthy.
Coinbase’s plans, announced in an April 11 blog along with 50 crypto projects “under consideration” for Q2 2022, could help tamp down the pervasive speculation that surrounds small-cap tokens. Meanwhile, this can help alleviate industry concerns about “information asymmetry,” which typically occurs when one party to a transaction — a seller, for instance — is much better informed than another transactional party, such as a buyer.
Last week’s pre-list, which included 45 ERC-20 tokens on the Ethereum blockchain network and five SPL tokens on the Solana network as well as future token lists, is meant to “increase transparency by providing as much information symmetry as possible,” the United States’s largest crypto exchange explained.
Will it really smooth out the crypto-investor playing field, though? “It can be a step in the right direction,” Lennart Ante, co-founder at Blockchain Research Lab gGmbH and author of a research paper on information asymmetry in Bitcoin (BTC) transactions, told Cointelegraph. “In theory, this reduces information asymmetry and, thus, the price effect at the time of the listing.”
“More transparency is always welcome, obviously,” Daniele Bianchi, associate professor in finance at the School of Economics and Finance of Queen Mary University of London, who has published research on crypto price swings, told Cointelegraph. That said, “information asymmetries and
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