Michael Novogratz Believes ICO Token Fundraising Market is Dead
It seems that the Initial Coin Offering (ICO) market looks like dead. This is according to the billionaire investor Mike Novogratz, a strong supporter of Bitcoin (BTC) and virtual currencies. ICOs expanded in the market at the end of 2017 and the beginning of the current year raising around $1.6 billion in January.
However, the positive trend couldn’t last for a long period of time. Month after month, the number of funds raised by ICOs was slowly falling. In November, for example, ICOs were able to raise close to 12% of what the market gathered in January.
The ICO market started to fall alongside virtual currencies. At the end of 2017, Bitcoin reached $20,000 and a few weeks ago, Bitcoin touched $3,300. Several ICO tokens have also disappeared, while some others were able to keep in the market but losing more than 95% of their value.
Mike Novogratz manages the crypto bank Galaxy Digital and has been very positive towards Bitcoin and other virtual currencies. During a conversation with Bloomberg, he mentioned that the ICO market is ‘pretty much dead’ now.
He explained that during the time in which ICOs were raising money, there were several projects that were simply scams or were performing fraudulent activities. This is why several regulatory agencies around the world decided to ban or start to regulate Initial Coin Offerings. This is the case of South Korea, for example, that completely banned ICOs. China did something similar, but went even further and banned all cryptocurrencies, including Bitcoin.
The U.S. Securities and Exchange Commission (SEC) has also been trying to better regulate the market. This is why the regulatory agency increased its scrutiny in the market. The SEC has also announced enforcement actions against two ICOs just a few weeks ago.
Novogratz Commented About This:
“I think you’ll see a market for security tokens – a real estate portfolio that gets tokenized, for example. These aren’t things that go from $1 to $1,000. They’re things that yield 14 percent, and they’ll be sold to qualified buyers. That sounds a heck of a lot less sexy, but you’re going to see that business grow.”
During the last few months, that the market has been falling, several ICOs and other projects started to sell the tokens that they held in order to avoid further losses. The faster the market plummeted, the more ICOs that were selling their funds.
Although the market is down and several ICO tokens disappeared, Novogratz believes that this is a fantastic opportunity. He mentioned that firms that are used to 80% drops in their balance sheet can stand this bear market easier than those who are in the game for the first time.