The cryptocurrency community will remember 2018 for two reasons. The first, and most obvious reason is the utter collapse of Bitcoin and with it the cryptocurrency market. While it is looking like another bull run will take Bitcoin to new heights, that initial shock of seeing cryptocurrency fall so drastically created a new generation of hardened trading veterans.
The second thing 2018 will be remembered for is the collapse of ICOs. While this did not make the mainstream news in the way that Bitcoin's collapse did, it will have an even greater impact on the innovation surrounding cryptocurrency in the future. December saw only $74 million raised which is just a fraction of the lowest month in the preceding 12 months. In fact, $74 million was the lowest it has been seen.
The fall is so great, in fact, that even with cryptocurrencies having recovered somewhat and the beginnings of a bull market on the horizon, ICOs are still flagging this year. How badly? Well... it's currently the beginning of May, and there has only been around $150 million raised in ICOs since January. Every single month since ICOdata.io started collecting stats in April 2017 has had significantly more. The market is in disarray and companies that were planning to open up banking on the ICO trend are becoming ever more hard-pressed for cash.
Regulations have also caught up with ICOs. They have been banned in some countries and declared as securities in others. The US SEC sees all tokens as securities and polices them as such. STOs have become more frequent, but with regulations still up in the air regarding a variety of issues, they are not as hot as they once were either. The market for STOs is not yet mature enough to support the number of companies that are looking for financing. The fact that many STOs are rebranded ICOs that were made to be slightly more "SEC Compliant" is not helping the market at all. Instead of blazing a path to new protocols, they are just rehashing old ideas as it were.
So what do industry experts think? There is widespread negativity around both ICOs and STOs and this is best shown by Lewis Fellas, co-founder of Bletchley Park Asset Management. He is the Chief Investment Officer and his word carries weight in the industry. He is of the opinion that the ICO market is 99% dead. He says that the valuation models were lacking and that is a key reason why they have failed so spectacularly. Out of 550 ICOs that were analyzed, bletchley only invested in 2. He does believe that STOs are the future in digital assets, but there is some time needed for them to fully realize their potential and 2019 is not the year to really get excited about them.
Arianna Simpson, managing director at Autonomous Partners, says that companies are avoiding ICOs and going for private token sales more and more. This is keeping out retail investors who have fled since being burnt last year. She does, however, believe that prospects for STOs are significantly better and that they will be a much larger market than ICOs were. However, for 2019, she believes that they will still fly under the radar and not many companies will go with them.
Bruce Fenton believes that the ICO model of 2017 and 2018 is long gone. Raising money via public offerings open to everyone is not sustainable and regulations have started to reflect that. He does mention that institutions are taking over the ICO space. This would be interesting to watch as IEOs are set to be the biggest breakthrough in this area for some time.
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