How Sentiment Impacts the Success of Blockchain Startups – An Analysis of Social Media Data and Initial Coin Offerings

Abstract

The blockchain technology is subject to intensive discourse on social media. One example is the promotion of Initial Coin Offerings (ICO) as a new financial instrument for startups. As ICOs are generally low-regulated, potential investors and entrepreneurs are faced with decision-making under uncertainty. This uncertainty might be partially offset by social factors. Based on established behavioral, economic and information systems theory, we investigate how different social media channels are linked to the capitalization of blockchain startups. We present empirical evidence from online search trends, financial data and a corpus of 231,758 tweets related to 524 ICOs. Our results suggest that higher search volume, positive sentiment and the increased use of emotive language on Twitter are linked to a high capitalization. The results are relevant for startups and potential ICO investors.