Latest BitMex Research Report Reveals ICO Market is Losing Its Luster Towards Crypto Investors
There was a time in the crypto industry when Initial Coin Offerings (ICO) were quite popular and unbelievably successful. These ICOs easily raised billions of dollars as funding for quite a few crypto projects over time. However, for some reason, ICOs are now either very few and far between or end up performing quite terribly.
BitMex Report On ICOs
BitMex recently published a report on their official blog about the state of the ICO market in recent times. According to the report, the ICO market for the first quarter of 2019 has almost completely slumped as it dropped as much as 97%, judging by the amount of funds that were generated. Furthermore, most of the ICOs initiated in the market last year have not performed well at all. Even though we might be able to blame the poor performance on the bear market that significantly overtook the sector last year, most of those offerings have slumped as much as 80% from the prices they began with.
This is a terrible cost for the investors who were a part of the offerings at the beginning. Coupled with the fact that the performance has been pretty bad, a lot of the tokens still haven’t been able to get on the many cryptocurrency exchanges in the market, which have made them almost completely useless to the investors.
Initial Exchange Offerings (IEO)
The report also touches on the fact that the market has done some rebranding of sorts, changing the name to IEO from ICO. This was probably done to make things seem different and better packaged and planned, probably to encourage potential investors who have been quite reluctant to invest. This so far has worked a bit well and has been able to change people’s minds, ensuring a certain level of interest in their projects. Although it’s low, IEOs have been able to ensure some profit and returns on investment (ROI).
The sad news is that the ROI from IEOs still hasn’t been sustainable. The report has it that even the IEOs that do considerably well almost crash as soon as they are able to get on an exchange. All the success, no matter how little or large, that’s typically generated from these offerings still end up going to nothing because the larger market generally isn’t a very enthusiastic one regarding the new coins. Due to this, the ROI is only guaranteed for about 24 hours after the coin hits the exchange. After that, everything crashes.
The report also mentions that only a very small fraction of the tokens are put up for sale. According to the report:
“The proceeds from IEOs can be relatively small, however on average only 4.4% of the total token supply is made available in the sale. Therefore, there are opportunities for project teams to make considerable profits from selling coins they granted to themselves. The 2019 IEOs were priced at a level which implies a total market capitalisation of US$907.7m, based on the disclosed total token supply.”
There is much to be longed for in the long term prospects of IEOs and the new tokens to be brought into the market. Whatever success recorded from recently floated IEOs seem like they can’t be sustained in the long run.