ICO success rates declining
ICOs gathered around 6 billion USD. A new record, 40 times as much as they raised in 2016. This all changed after the rise of ICO phishing, ponzi schemes and other scams. The awareness of these scams resulted in a declining success rate for ICOs.
As we all know, token sales or ICOs (Initial Coin Offerings) have been around for quite some time. It all started back in 2013 when Mastercoin organized the first token sale ever, raising 3.700 BTC within 12 hours. The phenomena of starting an ICO became a lot more popular in 2017, sometimes raising 35 million in under 30 seconds. Nowadays the ICO environment has changed a lot. Do you know what to expect next?
First ICO steps
Around October, ICOs had gathered ten times more as in all of 2016! By the end of 2017 ICOs went through the roof with high-grossing ICOs like Filecoin raising 257 million USD. ICOs gathered around 6 billion USD. A new record, 40 times as much as they raised in 2016. This all changed after the rise of ICO phishing, ponzi schemes and other scams. The awareness of these scams resulted in a declining success rate for ICOs. Social media platforms like Facebook even banned advertisements for ICOs, cryptocurrencies and binary options. Around February 2018, 46% of the ICOs in 2017 had failed. During that same period the grandfather of cryptocurrencies, Bitcoin (BTC), had collapsed.
The Bitcoin effect
Just like ICOs, Bitcoin seemed unstoppable in 2017. The year started somewhere around 1k and just kept growing until it reached the 20k mark around December. The enormous growth resulted in a lot of panic among traders. A lot of traders where new to cryptocurrencies and did not know how volatile this market could be. So this caused a massive drop after most investors dumped their BTC right away. The media made it even worse, underscoring the “fact” that Bitcoin was just a bubble. This negative market sentiment got reflected on ICOs.
ICO landscape 2018
Despite the negative market sentiment within the first quarter of 2018, ICOs kept raising money relatively easy. This all changed after the first quarter because investors didn’t see the quick return on investment like they did in 2017. Most of the ICOs lost half their value after the ICO was competed. This caused loses among the investors and even less trust then there was before. Eventually resulting in a so called bear market. Nowadays the market sentiment is getting better and better, even though a lot of ICOs still don’t get to be successful.
The future of ICO
Considering the fact that Bitcoin could make a huge jump after SEC’s approval of Bitcoin ETF regulations, Cryptomizers believes that this positive market sentiment will be leading for the future of ICOs and other blockchain solutions. One can agree on the fact that ICOs will keep popping up. Big whales are waiting for such regulations, making it a lot more attractive to start investing again. Besides the regulations we could have a look at the historical graphs. You can see that the last quarter always has been the most profitable, whether the ETF regulations get approved or not.
In conclusion Cryptomizers is positive about the future for an ICO that provides a real (blockchain) solution to something, preferably surrounded by a sustainable ecosystem and a solid team with capable advisors working on it. The sky is the limit and we are looking forward to see new blockchain solutions coming up. Curious what we think of your blockchain project? You can always contact us here.
Reference: https://www.cryptomizers.com/ico-succes-rates-declining/
