What Matters to Crypto Investors? Insights From Token Offerings on the Ethereum Blockchain

51 Pages Posted: 17 May 2022

See all articles by Valerie Laturnus

Valerie Laturnus

Goethe University Frankfurt - Department of Finance

Date Written: April 20, 2022

Abstract

Why do investors trade highly risky and illiquid blockchain assets in a low-information environment? This paper investigates intraday trading activity (within 1-minute, 30-minutes, and 1-hour intervals) on the Ethereum blockchain and examines how information content, derived from LDA topic modeling, motivates different types of investors to participate in token offerings. The paper finds evidence that investors trade on different contents of public information and price dynamics in the primary market are mainly susceptible to investment timing. This result is based on three empirical analyses. First, crypto-investing is speculative and mostly dominated by small and one-time investments. Second, investors review the information content in whitepapers and Bitcointalk carefully, implying high processing skills than a lottery play. Third, Bitcointalk's timely responses and expert opinions influence crypto trading positively in the short-term. Overall, the paper advances the understanding of Ethereum transaction data and informs practitioners and regulators on the Ethereum ecosystem.

Keywords: Ethereum, Token offerings (ICO/STO), Investors, High-frequency transactions, Bitcointalk, Whitepaper, Latent Dirichlet Allocation (LDA)

JEL Classification: G10, G11, G14, G41, L14

Suggested Citation

Laturnus, Valerie, What Matters to Crypto Investors? Insights From Token Offerings on the Ethereum Blockchain (April 20, 2022). Available at SSRN: https://ssrn.com/abstract=4087795 or http://dx.doi.org/10.2139/ssrn.4087795

Valerie Laturnus (Contact Author)

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, DE Hessen 60323
Germany

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