July 3rd 2018 as of now, it can be said that ICO market is extremely bearish.
More than 1,000 ICOs were performed up to now since 2017(Reference).These values are showing downward trend in the short term since mid-May 2018, in the medium-term since Jan 2018 as shown in the figure below.
Total Cryptocurrency Market Capitalization excluding bitcoin (coinmarketcap.com)
Actually, more than a half of all the tokens in the market are at the situation of ‘’below ICO price’’ which means, current price dropped below the ICO sales price
For instance, ICO Drops, a listing website that only lists good ICO projects, only around 100 of the 300 tokens are above ICO sales price. Focusing only on good ICO projects, only 1/3 of the projects’ ROI (return on investment)/USD price rate shows more than 1.0.
Below figure shows BTC/USD Price Trend. You will find nearly same line shape shown on the previous figure,’’Total Cryptocurrency Market Capitalization excluding bitcoin’’. It is a natural result that good token’s prices are also unlikely to rise in the down trend market since most of the token’s price movement is strongly correlated with the bitcoin price.
There is also an analysis result that, ICO’s total amount of funds raised is also influenced by the market situation. Below report taken from Argon Group says, the data show the amount of ICOs fund raised is correlated with the price of Bitcoin.
In March, we saw more ICOs that raised less on average. The total amount of funds raised in March also decreased significantly. This is most likely explained due to the adverse market conditions (bearish market sentiment), as the ICO market is strongly correlated with the overall crypto market, represented by the price of Bitcoin in the chart below.
Funds invested in ICO are mainly re-invested by investors who raised a big profit in cryptocurrency. It is natural to think the amount invested in ICO is lesser in this bearish situation when investors raise less profit.
Conclusion
According to all the data above, there are below risks to start ICO under poor Cryptocurrency market situation.
・We may see token price down right after ICO, cause below ICO price.（Investors’ loss）
・Unable to procure funds as expected, fundraising goal failure.（Project member’s loss）
Considering these risks, beginning ICO in this poor market situation is not advisable for both investors side and project member’s side. It is desirable to start ICO when the market shows a rising trend if the timing works.
