Article 6 Analysis: Cryptocurrency, Blockchain, and Financial Theory

This essay provides an analysis of the impact of cryptocurrency on financial markets, drawing from the article 'Article 6: This Is Not a Passing Fad'; CFA Exam Adds Crypto, Blockchain Topics.' It examines the increasing importance of cryptocurrencies like Bitcoin and their perceived impact on the financial and stock markets. The analysis applies basic finance theory to understand investor behavior, comparing the current cryptocurrency trend to the dot-com bubble of the 1990s. It concludes that cryptocurrency is here to stay and presents both challenges and opportunities for the global financial market, particularly for countries seeking alternatives to centralized systems. The essay also addresses the need for proper appropriation and long-term implications of cryptocurrency in the financial market.

Running head: ARTICLE 6 ANALYSIS 1
Article 6 Analysis
Student’s Name
Institutional Affiliation

ARTICLE 6 ANALYSIS 2
Article 6: 'This Is Not a Passing Fad'; CFA Exam Adds Crypto, Blockchain Topics By
Michael Patterson and Andrea Tan.
Looking closely at the impact of the cryptocurrency in the financial market and stock
market, people have been rather side-lining the likely effect that it is going to be having. Prices
that one used to see for Bitcoin and other cryptocurrencies have increased proving being of
importance in the financial market today. There is an element of humor with regards to the way
these cryptocurrencies are perceived. The common perception among people is that they are not
likely to have a meaningful impact on the financial and stock market in the long run (Patterson &
Tan, 2018). But if one starts to analyze the decision making the trend of some of the
organizations that are in public, one can see that they have started to base their financial strategy
in the manner that if there is a need, they might reap the benefit of the cryptocurrency which
have resulted to CFA Institute incorporating Crypto and Blockchain Topics in their exams.
Theory: Basic Finance Theory
The basic finance theory is about the fact that how the investment and profit from the
asset are going to be carried out and how the eventual decline from the asset is carried out
(Barber & Odean, 2015). The rationale is that if there is no way an investment is carried out and
there is no profit from the decline of the price of the asset, the price is then going to be
determined by the buyer that is going to be the most optimistic one (Brito, 2014). If there is a
perception that the cryptocurrency is overpriced, they are most likely to sell their stake and
would prefer to stay out of the market (Härdle, 2016). If there is a perception that the
cryptocurrency is overpriced, they are most likely to sell their stake and would prefer to stay out
of the market (Li & Wang, 2017). On the other hand, every other person is optimistic about the
likelihood of the way cryptocurrency is going to perform likely to stay in the market (Brito,

ARTICLE 6 ANALYSIS 3
2014). That means that they are going to buy cryptocurrency for the higher price as compared to
what it is going to stay in the market (Cheah & Fry, 2015).There is a perception that the increase
in the cryptocurrency is going to mean that the market would be starting to remunerate them one
day. Thus there are some interesting views about the direction in which cryptocurrency is
heading.
Analysis
The interesting thing that is needed to be looked at is that how the response of the
investors is going to be working out. What the organizations need to do is to make sure that how
the dotcom bubble is going to be working out in the same time period. The historical precedent
provides an interesting perspective in this regard. Looking at the previous trend and what
happened during the 1990, during the dot-com bubble, all the organizations had to show the
others that they are serious about the commercial use of the internet. Even just a press release
would have gone a long way towards making sure that the prices of the stocks are increasing.
The stock market and financial market is something that is highly speculative in its nature and
these little announcements used to go a long way towards improving the stock value of the
businesses. Comparing this with the cryptocurrency, it can be said that the same thing is
happening these days. As the cryptocurrency is something that has just started to trend and it has
become an "it" trend, it is creating an artificial pressure of sorts for the financial decision makers.
The economic impact of such thing is that the larger than the market value of the cryptocurrency
is going to suggest for the same period, to say the least.
Conclusion
As is the case with all the financial market implications, cryptocurrency is something that
is here to stay. The market experts are considering it as one of the biggest challenges to the

ARTICLE 6 ANALYSIS 4
supremacy at the global level and countries like Russia which are against this centralization of
the global financial market are more than eager to make sure that they take advantage of this
movement. The problem is that when one talks about the functionality of the financial market,
the key implication is that how it would be made sure that appropriation of the cryptocurrency is
going to be done and what are some of the long-term implications in this regard. Investors are
often willing to keep going in one direction, even if it seems risky or irrational until they're
jarred. But when they are scared or shaken enough

ARTICLE 6 ANALYSIS 5
References
Barber, B. M., & Odean, T. (2001). The internet and the investor. Journal of Economic
Perspectives, 15(1), 41-54.
Brito, J., Shadab, H. B., & Castillo, A. (2015). Bitcoin financial regulation: Securities,
derivatives, prediction markets, and gambling.
Cheah, E. T., & Fry, J. (2015). Speculative bubbles in Bitcoin markets? An empirical
investigation into the fundamental value of Bitcoin. Economics Letters, 130, 32-36.
Härdle, W. K., Hautsch, N., & Overbeck, L. (Eds.). (2016). Applied quantitative finance (Vol. 2).
Springer.
Li, X., & Wang, C. A. (2017). The technology and economic determinants of cryptocurrency
exchange rates: The case of Bitcoin. Decision Support Systems, 95, 49-60.
Patterson, M. & Tan, A. (2018, July). This Is Not a Passing Fad: CFA Exam Adds Crypto,
Blockchain Topics