The research paints a bearish picture for the ICO market
It goes without saying that the initial coin offerings, better known as ICOs, did not perform well in the crypto market of 2018, which in itself worked unpleasantly in the eyes of optimistic speculators. Regardless, a report released by ICO Rating, one of the leading startups of crypto research / data analytics, has only cemented this sentiment.
ICORating analysts released their quarterly brand report for the third quarter of 2018. The ICO market research report is a comprehensive analysis of trends and latest market developments.
– ICORating (@ICORating) November 16, 2018
In the 67-page report, the final study noted that "the third quarter of 2018 did not have the success of the second quarter and the first quarter for the ICOs", adding that this subindustry performance was a general disappointment. Even ICO tokens that have seen a load of interest for boats in 2017, such as EOS, have declined, indicating that this subset as a whole has suffered, and as a result.
Supporting its claims with complex statistics, the research company explained that the $ 1.8 billion loan has been siphoned in 597 projects in the last three months, while this figure may seem staggering, compared to funds raised in the second quarter, $ 1.8 billion could just seem like a drop in the bucket, so to speak.
More specifically, in the second quarter of this year, ICOs raised $ 8.35 billion, even though the market was depressed during that period.
And, on a case by case basis, the projects did not go too well, with ICO Rating drawing attention to the fact that only 57% of the projects were able to raise more than $ 100,000 to pop, with only 4 % of ICO ads (only 24) earn a place in public exchanges.
These depressing statistics only accentuate the fact that 76.15% of projects funded by ICO had "nothing but an idea", which is a sad but common theme in any industry nascent, including cryptography and blockchain.
Reasoning why the projects suffered during the last quarter, ICO Rating drew attention to "a significant decline in yields (bear market)", decreasing levels of transparency by the teams, investor / fund maturation , lack of innovation, slowdown of blockchain / encryption rates, and, perhaps most importantly, the fact that the regulation has spread to ICOs in recent months.
Just recently, as predicted by Ethereum World News, Airfox and Paragon have been indicted by the US Securities and Exchange Commission (SEC) due to the fact that the two startups have failed to register with the appropriate regulators. Speaking of this case, a SEC representative noted:
We have made it clear that companies that issue securities through ICO are required to comply with the statutes and existing regulations governing the registration of securities.
Airfox and Paragon were forced to pay a fine of $ 250,000 and compensate investors who participated in their illegal token sales.
This case is only the limit of the iceberg, because, as stated by ICO Rating:
The main problem with ICOs is that a large number of them are scams or scam-like projects, and the fact that some tokens sold were actually securities. In July 2017, the SEC published a report stating that most, if not all tokens, should be classified as titles and therefore subject to the relevant regulation.
The company also drew attention to the scams, noting that 19% of "projects with previously announced ICOs" have deleted their websites and social media platforms in the third quarter, which is not a good sign considering that "only" 9% disappeared in the second quarter. These scams have raised $ 62.1 million.
Although this subindustry has underperformed and is full of scams, there were still projects that stood out like diamonds in the rough. The London Football Exchange, Cryptosolartech, Alchemy and 4NEW generated more than $ 40 million in funding, while another 16 raised more than $ 20 million, which is not a sum to be made.
Title Image Courtesy of Sharon Mccutcheon On Unsplash