Was the ICO boom just a sideshow of the Bitcoin and Ether Momentum?

Franklin Allen, Antonio Fatas and Beatrice Weder di Mauro

Journal of International Financial Markets, Institutions and Money, 2022, vol. 80, issue C

Abstract: We investigate whether the market for ICOs in 2017–2018 and 2021 showed signs of contagion from prices of Bitcoin and Ether. During phases of optimism, ICO daily returns display low correlations with those of Bitcoin or Ether. But when the bubble bursts, correlations jump to very high levels, signaling that the ICO market becomes a sideshow of the cryptocurrency dynamics. We demonstrate that this high correlation was not present during the Nasdaq bubble in the 1990s, signaling that the price dynamics of digital tokens seems to be driven by a common factor, much more than in previous bubbles.

Keywords: ICOs; Cryptocurrencies; Bubbles; Contagion; Regulation (search for similar items in EconPapers)
JEL-codes: E40 E42 G10 G23 G28 G30 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Was the ICO Boom just a Sideshow of the Bitcoin and Ether Momentum? (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:80:y:2022:i:c:s104244312200110x

DOI: 10.1016/j.intfin.2022.101637

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