Random Walk

A Random Walk is a mathematical model that describes a path consisting of a succession of random steps. In finance, the Random Walk Hypothesis suggests that asset prices change randomly and that past price movements cannot be used to predict future ones.

This implies that the market is efficient and that all available information is already reflected in the current price. While modern quantitative finance acknowledges that markets are not perfectly efficient, the random walk remains a useful starting point for modeling price behavior.

It is the basis for more complex models that incorporate trends or mean reversion. In the context of crypto, the random walk model is often challenged by the observed presence of momentum and speculative cycles.