Cross-Listings of Blockchain-Based Tokens Issued Through Initial Coin Offerings: Do Liquidity and Specific Cryptocurrency Exchanges Matter?

BRL Working Paper Series No. 5

20 Pages Posted: 8 Mar 2020

See all articles by Lennart Ante

Lennart Ante

University of Hamburg; Blockchain Research Lab

André Meyer

Blockchain Research Lab

Date Written: February 10, 2020

Abstract

Initial coin offerings (ICOs) represent a novel funding mechanism where digital tokens are issued on the blockchain and sold to investors. One major reason for the success of this financing model is the fact that the issued tokens can immediately be traded on secondary markets. This event study analyzes 250 exchange cross-listings of 135 different tokens issued through ICOs on 22 cryptocurrency exchanges. We find significant abnormal returns of 6.51% on the listing day and 9.97% over a seven-day window around the event. Further analysis shows that the results clearly differ for individual cryptocurrency exchanges, as listings on individual exchanges yield returns of up to 34% on the event day, while others are negligible. An investigation of liquidity-related metrics shows that lower prior trading volume and asset market capitalization have positive effect on listing returns. Investors use phases of high market liquidity to sell off positions around the period of cross-listing events. These first results on the cross-listing effects of ICOs may be of relevance to investors/traders, ICO projects, cryptocurrency exchanges and regulators.

Keywords: Cryptocurrency, Cryptocurrency exchanges, Blockchain, Ethereum, Event study, Token sales

JEL Classification: G12, G14, G18, G24, G28, G30

Suggested Citation

Ante, Lennart and Meyer, André, Cross-Listings of Blockchain-Based Tokens Issued Through Initial Coin Offerings: Do Liquidity and Specific Cryptocurrency Exchanges Matter? (February 10, 2020). BRL Working Paper Series No. 5, Available at SSRN: https://ssrn.com/abstract=3537235 or http://dx.doi.org/10.2139/ssrn.3537235

Lennart Ante (Contact Author)

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Blockchain Research Lab ( email )

Colonnaden 72
Hamburg, 22303
Germany

André Meyer

Blockchain Research Lab ( email )

Colonnaden 72
Hamburg, 22303
Germany

HOME PAGE: http://www.blockchainresearchlab.org/en/home/

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