The initial coin offering industry is under a lot of pressure. Projects need to perform as quickly as possible. In the world of ICOs, that is very difficult to achieve. So far, nearly 70% of all initial coin offerings are valued at half of or less of their originally projected value. A worrisome trend which has investors concerned.
ICOs are Struggling to Keep Investors Happy
A report by Diar shows things do not look all that great for most initial coin offerings. Numerous projects have been analyzed over the past few months. Initial launch prices for tokens are no longer being met in seven out of ten cases. This further confirms how cutthroat the industry really is. There is no time to waste when it comes to developing potential killer apps.
The initial coin offering industry has no lack of funding. The year 2018 has resulted in a new record volume being raised by various projects. This is despite the bearish year 2018 has been for nearly all cryptocurrencies. Living up to the expectations has been difficult for most teams of developers. A big gap has appeared between how they perceive the value of a project, and what the market thinks its real worth is.
According to the research, the number of successful ICOs is at a year-long low. Additionally, the strong start in terms of funding has quickly evaporated during the Summer August was a new low in terms of capital raised from token sales. Neither of these indicators is positive or inspiring. Instead, it appears even further value declines may loom on the horizon for initial coin offerings.
Declines Were to be Expected
The research by Diar highlights some issues in the ICO industry. Poor capital management is one of the biggest concerns at this time. There is also the bearish market trend of 2018 which affects both cryptocurrencies and ICOs alike. Combined with the statistic of how 90% of projects will ultimately fail, there are plenty of reasons to be cautious.
Even so, industry experts are not overly concerned. Some expect the proper companies to push ahead regardless of hurdles along the way. Some of these token issuers will meet their demise, but that is entirely to be expected due to the competitive nature of the industry. Investors will continue to see merit in high-quality projects and contribute accordingly.
This new research may affect regulatory decisions affecting ICOs. Numerous governments are exploring ways to curb the enthusiasm among companies looking into this option. With proper guidelines, a lot less risk for investors will be introduced. Several countries have banned all ICO activity until further notice. Given these statistics, that may not be an unwarranted decision.
What do you think about the ICO industry’s decline? What will it take to turn it around? Let us know in the comments below.
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