Store of value or speculative investment? market reaction to corporate announcements of cryptocurrency acquisition

Abstract

We evaluate the stock market reaction following publicly-traded companies' announcements of cryptocurrency acquisition, selling, or acceptance as a means of payment. Focusing on firms whose core business is unrelated to blockchain or cryptocurrency (i.e., traditional firms), we analyze 35 events associated with 32 companies listed on stock exchanges from 7 countries. At the aggregate level, market reaction around such events is slightly positive but statistically indistinguishable from zero for most event windows. However, heterogeneity analyses reveal remarkable differences in market reaction between high (larger CARs) and low cryptocurrency exposure events (lower CARs). Multivariate regressions confirm that the extent to which a firm is exposed to cryptocurrency ("skin in the game") is a critical factor underlying abnormal returns around the event. Further analyses reveal that such an effect stems from economically meaningful acquisitions of BTC or ETH (relative to the firm's total assets). Our evidence is crucial to managers, investors, and analysts since it highlights how crypto adoption relates to firm value.