Initial coin offerings and the cryptocurrency hype - the moderating role of exogenous and endogenous signals

Ferdinand Thies (), Sören Wallbach (), Michael Wessel (), Markus Besler () and Alexander Benlian ()
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Ferdinand Thies: University of Liechtenstein
Sören Wallbach: Technical University of Darmstadt
Michael Wessel: Copenhagen Business School
Markus Besler: The DLT-Markets AG
Alexander Benlian: Technical University of Darmstadt

Electronic Markets, 2022, vol. 32, issue 3, No 38, 1705 pages

Abstract: Abstract Initial coin offerings (ICOs) have recently emerged as a new financing instrument for entrepreneurial ventures, spurring economic and academic interest. Nevertheless, the impact of exogenous and endogenous signals on the performance of ICOs as well as the effects of the cryptocurrency hype and subsequent downfall of Bitcoin between 2016 and 2019 remain underexplored. We applied ordinary least squares (OLS) regressions based on a dataset containing 1597 ICOs that covers almost 2.5 years. The results show that exogenous and endogenous signals have a significant effect on the funds raised in ICOs. We also find that the Bitcoin price heavily drives the performance of ICOs. However, this hype effect is moderated, as high-quality ICOs are not pegged to these price developments. Revealing the interplay between hypes and signals in the ICO’s asset class should broaden the discussion of this emerging digital phenomenon.

Keywords: Initial coin offering; Cryptocurrencies; Signaling theory; Fundraising (search for similar items in EconPapers)
JEL-codes: D81 G41 L15 L86 M13 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s12525-021-00460-9

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