A recent report claims that most tokens were trading below their ICO price in the first part of this year. The rapport even claims that many projects have used the funds to maintain their token value, instead of developing the projects.
Initial Coin Offerings is a subject that has been caught in a storm. Some places, like Jeju Island, wants to become an ICO-friendly blockchain hub while others, like South Korea, have banned ICOs altogether. However, they are looking at lifting the ICO ban.
Then there has been a lot of fraud and scams circulating cryptocurrencies, and two weeks ago, news stated that an ICO fraudster got a lifetime trading ban as well as a $30,000 fine. SEC issued the fine to the CEO of Tomahawk Exploration LLC, who used an ICO format to raising money from investors to open up to ten new drilling wells.
New research from BlockBeats, now states that most of the ICOs listed on big exchanges in Asia, such as Huobi, Binance, Kucoin, and OKEx, ended up trading below their token sale price with only a few exceptions.
According to the report, 98,8% of 264 tokens researchers looked at were trading below their ICO prices as of August 21. The only ones that were able to keep their value or appreciate in value were stable coins and three other coins.
“As of the market price on August 21, the breaking rate of these 264 SGD projects was 98.8 %, and only three projects have risen. Among them, the biggest decline was WBTC, whose price was 4.03 yuan, and now quoted at 0.0056 yuan, a decrease of 99.86 %, followed by WFEE, the price of the currency is 1.08 yuan, and the current price is 0.0035 yuan, a decrease of 99.68%”.
Most of the projects fell below their ICO issue price within a few months after the currency was settled, and the currency decline price range was mainly concentrated between 70 – 98% – which can be seen as an air currency. 96 projects have fallen more than 90% of the price.
Blockchain investment is now in a bear market, and a large number of break-through projects can smother investors with poor overall market performance, but they ignore the value of a project depending on whether the project team is creating value. It is very important to do your due diligence before investing in an ICO – especially since most of them fail.
It is very interesting to look at the Dot-com bubble and compare it with cryptocurrencies. On November 9th, the year 2000, the Dot-com bubble popped. The article states that it was hard to think of companies that were not down 75%.
“Of the 280 stocks in the index, 79 are down 90 percent or more from their 52-week high. Another 72 are down 80-89 percent. Only five are down less than 5 percent”.
What we should remember is that many companies came out of the bubble and grew like never before. According to tradingview.com, Amazon is a company who at the bottom of the bubble crashed from $113 to $5. We all know that it is now trading at $1,927. The cryptos that survive this winter could potentially see similar growth.
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Dennis Sahlström has been trading and investing since 2012 and has for the last two years been consistently profitable. He has been in the crypto- and blockchain space since the middle of 2017 and realized its potential for our world, not least how it is transforming the society we live in. He has now created an education platform, together with the wealth coach Marcus the Maria. They teach regular people how to invest and trade in the cryptocurrency market with proven strategies. If you want to learn more and feel like its time to get into this new asset class, download our free book and register to the next live training to get your future in cryptocurrencies started.