Abstract
Blockchain mania occurs in response to rapid increases in the Bitcoin price in markets with cryptocurrency circulation. However, Chinese government policies regarding the development of blockchain are inconsistent, blocking access to the offering and exchange of cryptocurrencies, such as Bitcoin, while raising blockchain technology to a strategic position. We empirically investigate whether the government’s inconsistent policies lead to blockchain mania and how it affects blockchain-related firms’ activities and performance. Our results are threefold. First, the supportive policy can fully offset the negative effect of the national boycott of cryptocurrencies. Second, non-speculative firms experience a stronger and longer-standing positive reaction, while the effect on speculative firms is transient and vanishes after receiving a definitive warning 10 days later. Third, the market reaction to government support appears more pronounced among firms with established blockchain technology alliances or official endorsements.
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