Fund Raising Bottoms Out with 2019 ICOs

May 13, 2019

The pressures put on the ICO market by the events of the last ten months has to lead to an almost total collapse in the ICO market. An illuminating article published in the Wall Street Journal has shed some light on how bad the situation really is for the vast majority of ICOs launched in 2019 so far.

So far, Q1 of 2019 had seen 118 million dollars raised, which is a paltry sum compared to Q1 of last year, when 58 times the amount was raised in the same time frame. The Wall Street Journal used TokenData as its source, which is a leading ICO analytics website.

Bears and regulators the main culprits of the slide

The two dominant factors that have to lead to this sorry state of affairs, at least according to the Wall Street Journal, is the overall bearish sentiment that was prevalent through the entire first quarter of this year. It was only at the very beginning of the second quarter, in April to be precise, the market woke up and has been going strong ever since. However, even with bulls in the front row and the trading market looking to remain bullish for the foreseeable future, it does not mean that things will look better for ICOs this year.

This is mainly due to fears, among investors and startups alike, of the punishments that have been meted out for non-compliance by various regulatory bodies. The SEC is the main driver behind these fears, particularly in the United States, as they charged a cryptocurrency based company in February for selling unregistered securities. The fact that this happened to Gladius Network, despite self-reporting, has struck fear into the general ecosystem.

Poor performance hampers the growth of ICO market

The ICO market was not just influenced by bears and regulators, no matter how scary they may be. If people in the market see a good deal or the opportunity to make money then very little can be done to stop anyone who wants to truly invest in the next big crypto token offering.

There is enough information on past ICOs to get a feel for the risks involved and the risk is quite high. There have been around 2500 projects launched since 2017 and of these, only 45% managed to successfully raise money. This gives startups who might ignore regulatory backlash as a mere nuisance if an ICO had a greater chance of success.

On the other side, investors look at the figure of 15% with dread. This 15% figure applies to how many coins are trading above the levels above or equal to their offering price. Combine that with the fraudulent ICOs that took the money and ran – it is not difficult to imagine investors being very wary of where they will put their money in the future.

Options abound with new innovations

While ICOs seem to be completely faltering, and many even seem to believe that they will be gone altogether in the near future, all is not lost. New methods of doing the exact same thing have come about due to the pressures described earlier.

IEOs are doing due diligence, marketing and listing coins in addition to doing the token offering. This has been one way that the market has corrected itself independent of the startups. IEOs offer some measure of security as at least the scam ICOs will not be as prevalent. After all, the costs to do an IEO are high enough to discourage fly-by-night operations.

STOs are making a grand entrance into the vacuum that was left behind by the drop off in ICOs and they are better in every way. They are more compliant with regulations and offer tangible rewards compared to ICOs.

Author: Ali Raza for:

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