Predictability of Ico Success and Returns

Abstract

Initial coin offerings (ICOs) provide a platform of tokens to the public as a way of crowdfunding, primarily to start-ups in cryptocurrencies. This empirical study is one of the first to analyse the determinants of ICO success and post-ICO returns which in recent years allowed start-ups to raise several billion US dollars.

A unique dataset of 432 executed ICOs was compiled from online platforms and other publicly available data sources.

ICOs have the potential to deliver a quick return, or alternatively can turn into an unrecoverable loss entailing high risks. This study identifies factors such as investor sentiment, time horizons and correlations with other asset markets that can provide predictability to both the post-ICO returns and the success of the ICO.

Overall, this study provides unique and new insights into this novel entrepreneurial practice, perceived by regulators as the 'wild west' of fundraising and an ever-increasing source of capital for new technology start-ups.