Betting on Bitcoin : Does Gambling Volume on the Blockchain Explain Bitcoin Price Changes?

The wallets with the largest volume of transactions on the Bitcoin blockchain are gaming applications. We use the historical gaming transaction data of Bitcoin holders, extracted directly from the blockchain, to measure risk-loving (lottery) appetite. Changes in the volume spent on the most lottery-like gambling wallet explain a significant portion (32%) of variation in the returns to the BTC price in the first half of our sample, but this effect disappears post-2016. This date coincides with a significant decrease in the proportion of Bitcoin transactions involved in gambling and aligns with other work that finds a decrease in the proportion of Bitcoin transactions linked to illegal activities and an increase in buy and hold investors around the same date