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

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