The Role of the Media in Speculative Markets: Evidence from Non-Fungible Tokens (NFTs)

61 Pages Posted: 7 Apr 2022 Last revised: 25 May 2022

See all articles by Joshua T. White

Joshua T. White

Vanderbilt University - Finance

Sean Wilkoff

University of Nevada, Reno

Serhat Yildiz

University of Nevada, Reno

Date Written: May 24, 2022

Abstract

Extant literature debates the role of news media in speculative markets. Some show media hype leads to irrational behavior, while others argue news attenuates market imperfections. To disentangle these roles, we study news about non-fungible tokens (NFTs), which are a natural laboratory since the space is typified by extreme growth coupled with skewed returns. We examine properties of NFT news using a sample of 26,000 articles and 7.6 million trades. We link the intensity and tone of NFT news to subsequent increases in market activity. Yet, seller returns and return volatility decrease following news. Thus, the media plays an information gatekeeper role by increasing informed participation in unregulated tokenized assets. These findings are inconsistent with the media hyping speculative markets. Instead, journalists appear to educate readers on the risks of NFTs.

Keywords: News, Non-Fungible Tokens, Digital Assets, Cryptocurrency, Blockchain, Ethereum

JEL Classification: G12, G14, G41

Suggested Citation

White, Joshua T. and Wilkoff, Sean and Yildiz, Serhat, The Role of the Media in Speculative Markets: Evidence from Non-Fungible Tokens (NFTs) (May 24, 2022). Available at SSRN: https://ssrn.com/abstract=4074154 or http://dx.doi.org/10.2139/ssrn.4074154

Joshua T. White (Contact Author)

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

Sean Wilkoff

University of Nevada, Reno ( email )

1664 N. Virginia St
Reno, NV 89557
United States

Serhat Yildiz

University of Nevada, Reno ( email )

1664 N. Virginia St
Reno, NV 89557
United States

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