Betting on Bitcoin: Does Gambling Volume on the Blockchain Explain Bitcoin Price Changes?

10 Pages Posted: 5 Aug 2019 Last revised: 21 May 2020

See all articles by Thomas Conlon

Thomas Conlon

University College Dublin

Richard McGee

Smurfit Business School

Date Written: August 1, 2019

Abstract

The wallets with the largest volume of transactions on the Bitcoin blockchain are gaming applications. We use the historical gaming transaction data of Bitcoin holders, extracted directly from the blockchain, to measure risk-loving (lottery) appetite. Changes in the volume spent on the most lottery-like gambling wallet explain a significant portion (32%) of variation in the returns to the BTC price in the first half of our sample, but this effect disappears post-2016. This date coincides with a significant decrease in the proportion of Bitcoin transactions involved in gambling and aligns with other work that finds a decrease in the proportion of Bitcoin transactions linked to illegal activities and an increase in buy and hold investors around the same date.

Keywords: Blockchain, Bitcoin, Gambling, Lottery

JEL Classification: G14, G12

Suggested Citation

Conlon, Thomas and McGee, Richard, Betting on Bitcoin: Does Gambling Volume on the Blockchain Explain Bitcoin Price Changes? (August 1, 2019). Available at SSRN: https://ssrn.com/abstract=3430334 or http://dx.doi.org/10.2139/ssrn.3430334

Thomas Conlon

University College Dublin ( email )

Smurfit Graduate Business School
Blackrock
Co. Dublin, n/a
Ireland

HOME PAGE: http://www.ucd.ie/bankingfinance/staff/drthomasconlon/

Richard McGee (Contact Author)

Smurfit Business School ( email )

Blackrock, Co. Dublin
Ireland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
35
Abstract Views
325
PlumX Metrics