Initial coin offerings have had an explosion in popularity in 2017 when the markets took off. Beginning in 2013 with the first symbolic sale of Mastercoin, Ico managed to raise over $ 6 billion in 2018.
Many of these crowdfunding projects have been built on the Ethereum blockchain (ETH) and have collected Ether as a source of funding. Recently, however, many ICO projects have started liquidating their cash balances while the market collapses further.
Diar, a data resource for the analysis of currencies and digital resources, analyzed 100 ETH portfolios of the ICO project during 2018.
Various projects have liquidated their treasury balances, with some having cashed their holdings in Ethereum in massive selloffs due to sinking prices throughout the year.
The various projects collectively collected over 4.6 million ETHs in funds raised in January 2018, but the sell-offs during the year brought this number to just over 3 million.
Since Ethereum was dragged from its high of around $ 1,300 to $ 135 at the time of writing this document, the remaining 3 million in ETH plummeted from over $ 3 billion to just $ 350 million.
More than 420,000 ETHs were liquidated in December alone, making most of the cash withdrawals at the lowest in the current market. The average monthly levy for 2018 was around 2.45 percent, but in December there was a strong withdrawal of 12.20 percent of ETH.
Almost half of the total ETH withdrawn in December comes from the liquidation of a single project – Filecoin which sold all of its holdings of 216.906 ETH. The decentralized storage solution provider initially raised $ 257 million in their ICO, but now takes a few cents on the dollar.
Aragon, another major liquidator, has moved nearly 40,000 ETH into a collateralised debt position (CDP) MakerDAO as a protection against volatility.
The various forms of coverage against current market conditions are coming a little late for many of these projects. The sale on the local market fund is certainly not a wise financial decision, and its likelihood of creating problematic legal situations is worse.
The scrutiny of many ICOs in relation to the US Securities and Exchange Commission could cause further financial damage to projects that are forced to return US investor funds. The SEC has previously clarified that "raising capital via blockchain requires compliance with federal securities laws. "
Many projects have not been presented as stock offers, but the SEC governs them as titles regardless. China and South Korea have previously banned ICOs from operations and sales within their borders.
The future of the ICOs will probably favor only the compliant and those who truly have an advantageous product to supply.
The days of mass funds' collection by the ICOs ended when the cryptocurrency regulation took over the industry and the funds were sold at lower prices.
The involvement of ICO has proved profitable for some investors in the past, but exceptionally risky and detrimental to others. It is better for the state of the sector that they no longer have a money-harvesting status.
You can track many of the projects analyzed with the ETH movements Dapp Capitulation.