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Initial Coin Offerings

Initial Coin Offerings are currently facing a very heavy reputation problem. The pump-and-dump schemes gained, which gained a lot of attention recently are only part of the problem. GreySpark Partners’s reseach on cryptocurrency growth shows some other shocking facts about Initial Coin Offerings. Nearly 50% of all Initial Coin Offerings in 2017 and 2018 failed to collect any funding at all. 40% managed to raise more than $1 million each.

The research studied ICO markets for the last few years and their finds are interesting to say the least. A shocking 890 token sales were unable to raise any funds, while 743 reached the 1$ million check point.

It’s noted in the research that a huge percentage of these token sales failed to provide any returns, especially as time goes on. The report used data from ICODATA and ICO-Check by August 2018.

There have been numerous discussions about the futures of Initial Coin Offerings. Many developers think that regulations and investors with better information gathering tools in combination with the current market situation, are responsible for the downward path of token sales. Others believe that scams and pump-and-dump schemes are the main reason for the bad state of ICOs.

The research focuses on more technical reasons and goes into detail on why the decline could be caused by a combination of all of the above. A serious lack of traction, scams, poor execution, unreliable marketing and rare product advancements. It’s not all bad because there is one market that seems to be upside: crypto-hedge funds.

The report states that as of September, a total of 146 firms have focused specifically on crypto and token projects only. This a huge increase despite the initial heavy drop in January 2018. In 2012 there were exactly 9 firms who were listed as crypto-hedge funds.

These crypto-hedge funds don’t come without a risk. On the contrary, they embrace it. Unlike traditional hedge funds, these crypto-hedge funds consist almost entirely of long positions with high risk. According to the analysis, they will continue to grow and it’s estimated that they will number between 160 and 180 until the end of the year.

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