By: Cameron Bowen, 9 September 2018

ICO Investors Become More Discerning During Bear Market |

The Initial Coin Offering (ICO) was the hottest investment category of 2017, but the funding model has taken a dive in recent weeks. This has led some to believe that the party’s over - that ICOs were a flash in the pan with its best days behind it.

We are quick to remind our readers that we cannot predict the future. But we’re also skeptical of claims that ICOs are going the way of the dinosaur. In fact, we believe that an ICO decline during September merely indicates that ICO investors are becoming more discerning.

In 2017, ICO investors had to struggle to lose money. While there were certainly losers in the class of 2017, most ICOs saw many multiples of ICO price once new coins hit popular cryptocurrency trading markets. 2017 saw more than $4 billion raised, and this total has more than doubled in 2018, with nearly 4 months yet to go in this calendar year. However, September brought a noticeable decline for this fundraising scene.

ICOs have only pulled in about $17.5 million in September 2018. Nearly half of recent ICO has failed to meet their goals. The difference between these stats and those of last year are stark. But they’re not the whole story.

40% of September ICOs raised at least $1 million. Furthermore, ICO funding remains more lucrative for the average blockchain company than traditional fundraising for the average traditional corporation. 79% of corporations fail to receive series A capital, compared to the 40% of blockchain companies already described. To say that the ICO model is dead is at the very least premature.

What seems more likely is that the caution that typifies the mid-late 2018 crypto markets is setting into the ICO investment side of the industry. This time last year, with very little exaggeration, all an investor had to do was buy “something” - nearly any ICO investment would yield profits.

And yet, a recent Statis Group study indicates that nearly 80% of the 2017 ICOs were scams. The ICO is as promising a fundraising/investment model as ever. We believe that investors are simply becoming more educated about the value, or lack thereof, of various ICOs. Where 2017 was an orgiastic market, 2018 investors are forced to deal more realistically with the true value of a new blockchain company or technology.

It’s this sort of behavior that creates rational markets and shuts out fraud. While the ICO market may not soon return to 2017 hype levels, if ever, the ICO is and will remain a remarkably powerful fundraising tool for blockchain companies. Furthermore, ICO market sentiment is a fickle thing; it can wax and wane quickly. Even as the news machine bemoans the death of the ICO, investors should keep looking for the truth of the matter - and the profits that go along with it.

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