No Shock Value Here as Q1 2019 ICO Token Sales Generate 50x Less han Q1 2018: WSJ Report


Data from ICO analytics website TokenData shows that fundraising from Initial Coin Offerings in Q1 of 2019 has been declining. It has raised only close to $118 Million in the first quarter of 2019 which is in stark contrast to the $6.9 billion raised in 2018 in the same period.

TokenData had tracked about 2,500 ICO projects since 2018 of which only 45% successfully raised money. And a meager 15% of the successfully raised ICOs are trading above their original price.

If one looks closely, 2019 is just a continuation of a trend that began to emerge in the middle of 2018.

Crypto bull Tom Lee has an explanation for this trend. Startups in the crypto and blockchain space appear to be pivoting away from token sales towards equity raises. This could be a sign of the emergence of maturity in the market, with projects looking towards utility and value creation rather than the ‘get rich quick’ ICO trend.

He said:

“We believe 2019 is a year of repair, setting up for a strong recovery in crypto prices broadly in 2020. Any improvements in supply/demand dynamics are positive for prices and hence, the slowdown in ICO funding is a net positive. The sentiment is also quite muted, which is positive.”

Google search analytics show that over the past year, the interest for the keyword ‘ICO’ has fallen drastically. However, inversely proportional to that, the search rate for STOs has shot up. With ICOs, once you have possession of the tokens, you are assured that you have a stake in the firm. With STOs however, since it is not a utility token, they do not represent any stake in the firm. STOs can only be used once a project is executed successfully to its launch.

There are other reasons for this downward trend too. Lack of utility of ICOs is one of them. While Bitcoin continues to find greater adoption across the world, many ICO tokens have failed to make any significant impact on the market. The reason for this failure is usually easy to deduce – it takes more than merely grafting a token to an existing business model and expecting it to become the “next Bitcoin.”

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