Market Efficiency Coefficient

The market efficiency coefficient is a quantitative measure used to assess how quickly and accurately asset prices incorporate new information. A perfectly efficient market would have a coefficient that reflects instantaneous price adjustment, meaning no arbitrage opportunities persist for more than a negligible amount of time.

In practice, crypto markets often show lower efficiency coefficients compared to traditional equities due to technical barriers and market fragmentation. Analysts use this metric to evaluate the maturity of an asset class or the effectiveness of a trading venue.

By tracking this coefficient over time, researchers can observe the impact of institutional adoption and improved trading technology on market stability. It is a core concept in evaluating the maturity of decentralized financial systems.