Leading experts in the sphere of digital currencies almost unanimously predict the imminent collapse of the ICO market. Some experts believe that this will happen this winter, someone gives the market two more years. But one thing is clear: investors do not have much time to increase their profit in dozens of times in a matter of days. And there is definitely a limit to this process!
The CarTaxi’s project analysts talk about the main reasons for the upcoming transformations.
Blind investments
The general attitude of investors investing in the initial placement of coins can be characterized as excessive optimism. After in 2016, the DAO project attracted $ 152 million through ICO (before this, earnings for ICO were estimated at hundreds of thousands of dollars), the investment tool itself attracted a lot of attention. The number of teams that decided to attract investment through ICO, has grown at times. According to Blackmoon, until the end of this year around the world will be about a thousand ICO. If for the entire 2016 ICO projects total investments estimated about $ 300 thousand, then for the last period of 2017 — $ 1.2 billion. But there are still several months ahead.
The procedure for investing in ICO-projects is quite simple, and the dividends from them promise impressive. This attracts non-professional investors to the market. As a result, fraudsters and scammers make money on ICO: projects that raise money for investors, and after — just disappear. The creator of the Ethereum project, Vitalik Buterin, speaks of another market problem — the appearance of nonprofessional teams with projects that have an unviable business model. “They release tokens not for the long-term purpose, but only because they have a product to sell and earn money,” the expert warns. Firstly, the idea of the project must be viable. And secondly, it should have high-quality business planning. The creators of the project, going to the ICO, should have an understanding of what the attracted money will be spent on. If more is involved during the ICO than it is necessary — this is bad for investors. For example, our project consists of a team of not only IT specialists, but also professionals with a strong financial and business background. In addition, during the ICO, we will raise funds not for testing the super-idea, but for the development of an already successfully operating business. Unfortunately, among the ICO projects there number of actually operating businesses or working concepts is in the minority. And the majority are owners of utopian and non-viable ideas, who decided to make money on the hype around this tool.
Over time, investors will realize that many projects have not fulfilled their promises on profitability, and will begin to put up their tokens for sale. There will be many sellers, but few buyers. This will lead to the collapse of the ICO market in today’s form. Less investments will be attracted, and earning on ICO will be more difficult. Investors will become more cautious and attentive.
State control
The fact that scammers operate freely in the ICO market is also of great concern to the governments of different countries. Well, apart from multimillion-dollar flows of funds that are evading taxes. The US expressed its position that the ICO should be controlled as a securities market. A similar position was expressed by Singapore. Russia is going to legalize all the processes related to the blockchain, as early as next year. The Russian Association of the Blockchain and Crypto-Currency (RABIK), whose main goal is the legalization of blockchain processes, has already begun work. China, as is well known, completely banned ICO. True, analysts tend to believe that this is a temporary measure, which in the future will be replaced by state regulation of the industry. After the introduction of the legislative framework, on the one hand, there will be less projects going for ICO. Investors too. Obligations will impose additional costs on ICO projects, which means that this investment tool will no longer be able to bring those eye-popping incomes with which the market is dealing now. On the other hand, this market will bring more real companies with operating businesses and projects from among large corporations. This will make it more civilized and safe.
Anyway, at the moment we are dealing with a fast-growing market, which is so far almost impossible to regulate. Traditionally, high risks provide promising opportunities for investors. But in the future a couple of years, and maybe sooner, the situation will change. The market will become more civilized and safe, but less profitable. Therefore, from the point of view of profitability, the best time for investments is now. True, with the condition that the project for investment is selected competently.
