The Economics of Crypto Funds

Posted: 15 Jun 2021

See all articles by Paul P. Momtaz

Paul P. Momtaz

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

Date Written: June 11, 2021

Abstract

We compile a unique dataset combining token offerings data with insitutional investment data, as well as proprietary performance data of crypto funds. Crypto funds are a new intermediary in entrepreneurial finance markets that employ sophisticated investment strategies typically only seen in public equity markets thanks to the liquidity of cryptocurrency markets. We find that token offerings receive higher valuations in the presence of crypto funds and post-offering institutional investments are also characterized by a jump in the cryptocurrency price. Consistent with the asset management literature, we find that crypto funds underperform the market (interestingly even before fees). We also examine how these patterns vary in the cross-section of crypto fund types and startup characteristics.

Keywords: Cryptocurrency, Token Offerings, ICOs, STOs, Blockchain, Entrepreneurial Finance, Hedge Funds, Venture Capital, Decenrtalized Finance, DeFi

JEL Classification: G24, G32, K22, L26

Suggested Citation

Momtaz, Paul P., The Economics of Crypto Funds (June 11, 2021). Available at SSRN: https://ssrn.com/abstract=3865240

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

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