Investor Sentiment and Initial Coin Offerings

The Journal of Alternative Investments, 22 (4), Spring 2019, https://jai.pm-research.com/content/21/4/41

Posted: 31 Oct 2018 Last revised: 4 Oct 2019

See all articles by Wolfgang Drobetz

Wolfgang Drobetz

University of Hamburg

Paul P. Momtaz

University of California, Los Angeles (UCLA) - Anderson School of Management; University College London Center for Blockchain Technologies

Henning Schröder

University of Hamburg - Hamburg Business School; Hamburg Financial Research Center

Date Written: November 12, 2018

Abstract

We examine to what extent the market for initial coin offerings (ICOs) is driven by investor sentiment. Our results based on a comprehensive set of sentiment and coin price data suggest that the ICO market is driven by crypto-related sentiment, but is almost unrelated to general capital market sentiment. Among the crypto-related sentiment, social media channels, rather than traditional news channels, are the main source of investor sentiment. We find that ICO firms exploit ’windows of opportunity’ and avoid periods of negative sentiment. Coins listed during periods with negative investor sentiment generate negative returns in the short run. Moreover, returns to investors on the first day of trading predict long-run returns up to sixth months.

Keywords: Initial coin offerings, ICOs, investor sentiment, market sentiment, market timing, window of opportunity

JEL Classification: G10, G24, G30, G32, K22, L26

Suggested Citation

Drobetz, Wolfgang and Momtaz, Paul P. and Schröder, Henning, Investor Sentiment and Initial Coin Offerings (November 12, 2018). The Journal of Alternative Investments, 22 (4), Spring 2019, https://jai.pm-research.com/content/21/4/41. Available at SSRN: https://ssrn.com/abstract=3262980 or http://dx.doi.org/10.2139/ssrn.3262980

Wolfgang Drobetz

University of Hamburg ( email )

Moorweidenstrasse 18
Hamburg, 20148
Germany

Paul P. Momtaz (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

University College London Center for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
Malet Place London WC
London, London
United Kingdom

Henning Schröder

University of Hamburg - Hamburg Business School ( email )

Moorweidenstr. 18
Hamburg, 20148
Germany

Hamburg Financial Research Center ( email )

c/o University of Hamburg
Moorweidenstr. 18
Hamburg, 20148
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
1,168
PlumX Metrics