The extreme volatility in bitcoin or blockchain-related shares proves once again stock prices are not always efficient, but can be driven by human emotion instead of rational analysis.

Several small stocks captured the speculative imagination of traders this week.

Future FinTech soared as much as 200 percent intraday Tuesday as some speculated the company is moving into crypto-related business, even though there is no evidence it was real.

Longfin surged 1,342 percent in two days through Monday to a market value of more than $3 billion after buying a cryptocurrency company with no revenue. The rally spurred the company’s CEO to say “this market cap is not justified.”

Perhaps most eye-popping of all, Long Island Iced Tea shares rose 183 percent Thursday after it announced it is changing its name to “Long Blockchain Corp.” The company said it will focus on investing in the technology behind bitcoin.

These volatile moves are likely due to traders chasing the latest fad and price momentum, not the rational fundamental appraisal of an efficient market.

“It’s a testament to greed,” Sal Arnuk, co-founder of Themis Trading, said Thursday. “For speculators today, the game is bitcoin. A few years ago it was marijuana stocks.”

“Efficient market hypothesis” was created by Nobel Prize winning economist Eugene Fama. It stated securities market prices instantly reflect all the information on a company’s fundamentals and the economy. As a result, any out-performance from stock-picking is due to chance not investing skill, according to the efficient market believers.

But how can this be true, when stocks such as Longfin traded down 50 percent and up 50 percent in time periods of minutes and hours Monday? It is far likely the volatile price moves is due to greed and human emotion.

Warren Buffett blasted the theory in a 1984 column entitled “The Superinvestors of Graham-and-Doddsville.” The Oracle of Omaha pointed to the significant outperformance of a group of investors that bought stocks when they were undervalued.

Buffett explained the reason why the markets are not efficient is due human emotion:

“I’m convinced that there is much inefficiency in the market. These Graham-and-Doddsville investors have successfully exploited gaps between price and value. When the price of a stock can be influenced by a ‘herd’ on Wall Street with prices set at the margin by the most emotional person, or the greediest person, or the most depressed person, it is hard to argue that the market always prices rationally. In fact, market prices are frequently nonsensical.”

What Buffett wrote in 1984 is as true then as it is today with bitcoin mania stocks.

Future FinTech, Longfin and Long Island Iced Tea shares all declined by 6 percent, 9 percent and 17 percent respectively Friday.

— CNBC’s Evelyn Cheng contributed to this report.