ICO Market Falls to Lowest Level Since May 2017
The Initial Coin Offering (ICO) market seems to be dwindling rather quickly, despite two consecutive successful quarters in 2018. In August, the fundraising model collectively raised only $326 million USD, the lowest since May last year, as reported by Bloomberg. Does this signal the end of the ICO boom?
Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts
Overheated ICO Market Shows Signs of Cooling
A report from Autonomous Research, an independent financial research provider, suggests that the ICO craze may be dying down. In the first two quarters of 2018, funds raised through ICOs amounted to over $6 billion, bringing the average funds raised per month to $1 billion, per ICODATA.IO. However, the month of August saw only $326 million raised, suggesting a crash in interest.
The report also pointed out that Ethereum’s recent price pullback was possibly due to ICOs liquidating ether tokens to fulfill project commitments. That correlation has been questioned by Bitsonline’s Paul de Havilland, however. Startups raising funds using the Ethereum blockchain were also a factor that drove ether prices up.
The ICO market registered massive growth in the last quarter of 2017, rising with bitcoin’s skyrocketing price. In 2017, the total amount raised from ICOs was $6.1 billion from 873 projects.
Eight months into 2018, funds raised through ICOs have reached close to $7 billion. However, the ICO market now seems to be cooling.
Fears of Regulation Slow ICO Market
The declining number of token sales may be attributed to the absence of high-profile projects, a surge in well-versed investors, market saturation, and regulations. ICOs such as Telegram helped the ICO market peak to new levels. The absence of such high-profile ICOs could also be a reason for the decline. Additionally, general sentiment towards the fundraising model has changed.
Meanwhile, another report from GreySpark Partners, a financial consulting firm, suggested that about 50 percent of ICOs between 2017 and 2018 have failed to raise any funds whatsoever. Skeptics also indicate that only 40 percent have managed to raise $1 million.
ICOs that did raise funds prior to the cryptocurrency price upsurge at the end of 2017 are now sitting on huge piles of money. Hence, regardless of the cryptocurrency price slowdown, these ICOs will be able to actualize their commitments.
Yesterday, a Bloomberg crypto reporter tweeted:
This table shows some of the biggest ICOs have been able to keep funds they raised mostly intact in the downturn. So even if there's no market rebound in sight, they're still sitting on enough cash to deliver what they promised. Will they? https://t.co/5sCFE76G66 pic.twitter.com/h8HzyIvf3g
— Camila Russo (@CamiRusso) September 10, 2018
The absence of regulations in 2017 and 2018 helped ICOs raise millions of dollars. However, now the regulatory pendulum is swinging. Recently, Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), has hinted at plans to extend scrutiny over ICOs in its annual Corporate Plan to foster investor interest. Also, a Belgian think tank Bruegel called for pan-European “common rules” on cryptocurrencies and how tokens are distributed.
Is the ICO craze dying down? Share your views in the comments section below.
Images via Pixabay