These are two terms that are similar when it comes to looking at the stock market, but, they do vary in their meanings:
Market Efficiency- refers to the degree to which market prices reflect all available, relevant information. If markets are efficient, then all information is already incorporated into prices, and so there is no way to "beat" the market because there are no undervalued or overvalued securities available.
The Market Is Always Right- While there is little less of a settled definition, think of it this way, when you buy a stock, you are always paying exactly what that stock is worth at that moment, otherwise, you could not have bought it. You would never pay more than it is worth and no one will sell it to you for less than it is worth. (Feel free to comment with all the exceptions to this, but, my point is when you go to the market to buy an individual stock, this idea is correct.)
While the price for a stock may be both right and efficient, it can still be wrong... sort of. This is because new information is always coming out and unknown information is always being revealed. The market is only right for that exact moment, not for even one second later. You can try and take comfort when you buy a stock and it tanks, that at least the moment you bought it, the market agreed with your choice. If you are truly going to time the market, you better be in possession of information that falls outside, "all available, relevant information." My guess is, that if you have this insider information, you probably wouldn't be reading my article.
So this brings us to crypto, we will use Bitcoin for this discussion. Is the price for Bitcoin "Right" and is it "Efficient?" I would say it is always right, since the price you can buy it at is always the correct price at that exact time. Another way to think of it is that you could buy or sell it at the exact same price at any moment in time. If this is the case, the price must be right.
The real question is if Bitcoins's price is efficient? Is all available information built into the price? I would question this. Recent surveys say that one in four American investors own Bitcoin, but, since these surveys don' really define investor, I think the number is likely less. Since it is thought there are about 50 million accounts with Bitcoin in the US, even if all the owners only had one account, this would still be less than 25 percent of the population. Anyway, my point is that the price probably lacks efficiency since so little is still know about Bitcoin as it continues to make its way into the mainstream. With so few investors, in relation to the population, there is still room for a lot of unknowns. So yes, "all available, relevant information" is built in, but, that information is still so lacking that it mutes the efficiency.
What can you take away from this? Well, it probably means the price of Bitcoin will either go up, down, or stay consistent. You're welcome for that insight.
