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Cross-listings of blockchain-based tokens issued through initial coin offerings: Do liquidity and specific cryptocurrency exchanges matter?

Author

Listed:
  • Lennart Ante

    (Blockchain Research Lab
    University of Hamburg)

  • André Meyer

    (Blockchain Research Lab)

Abstract

Initial coin offerings (ICOs) represent a novel funding mechanism where digital tokens are issued on the blockchain and sold to investors. One major reason for the success of this financing model is the fact that the issued tokens can immediately be traded on secondary markets. This event study analyzes 250 exchange cross-listings of 135 different tokens issued through ICOs on 22 cryptocurrency exchanges. We find significant abnormal returns of 6.51% on the listing day and 9.97% over a seven-day window around the event. Further analysis shows that the results clearly differ for individual cryptocurrency exchanges, as listings on individual exchanges yield returns of up to 34% on the event day, while others are negligible. An investigation of liquidity-related metrics shows that lower prior trading volume and asset market capitalization have positive effect on listing returns. Investors use phases of high market liquidity to sell off positions around the period of cross-listing events. The results on the cross-listing effects of ICOs may be of relevance to investors/traders, ICO projects, cryptocurrency exchanges and regulators.

Suggested Citation

  • Lennart Ante & André Meyer, 2021. "Cross-listings of blockchain-based tokens issued through initial coin offerings: Do liquidity and specific cryptocurrency exchanges matter?," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 44(2), pages 957-980, December.
    • Handle: RePEc:spr:decfin:v:44:y:2021:i:2:d:10.1007_s10203-021-00323-0
    DOI: 10.1007/s10203-021-00323-0
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    References listed on IDEAS

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    Cited by:

    1. Steinmetz, Fred & von Meduna, Marc & Ante, Lennart & Fiedler, Ingo, 2021. "Ownership, uses and perceptions of cryptocurrency: Results from a population survey," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    2. Alessandra Cretarola & Gianna Figà-Talamanca & Cyril Grunspan, 2021. "Blockchain and cryptocurrencies: economic and financial research," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 44(2), pages 781-787, December.
    3. Almeida, José & Gonçalves, Tiago Cruz, 2023. "A systematic literature review of investor behavior in the cryptocurrency markets," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    4. Chitsazan, Hasti & Bagheri, Afsaneh & Tajeddin, Mahdi, 2022. "Initial coin offerings (ICOs) success: Conceptualization, theories and systematic analysis of empirical studies," Technological Forecasting and Social Change, Elsevier, vol. 180(C).

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    More about this item

    Keywords

    Cryptocurrency; Cryptocurrency exchanges; Blockchain; Ethereum; Event study; Token sales;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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