Vast majority of crypto prices drop after ICO
More than 8 of every 10 coins offered in the first quarter dropped in price after their ICOs.
By the end of March, 2 of the 89 exchange-listed cryptocurrencies that went public in early 2018 had suffered total losses, though a third one returned participants 1,050%, according to ICORating research.
That illustrates the high risks and rewards of the infant cryptocurrency market. Overall, however, success stories are relatively rare. Just four of those initial coin offerings (ICOs) doubled participants’ money right off the bat, and 16 grew supporters’ money. The rest – a full 82% of them – were worth less than the ICO price by quarter’s end. In fact, a majority (55%) saw the value of their cryptocurrency cut in half.
The exchange-listed ICOs targeted financial services applications most, with 38 projects, followed by 27 exchanges and wallets, 19 gaming and virtual reality ICOs, 18 blockchain infrastructure projects, 17 marketing and advertising ICOs and 16 ICOs each for social media and communication, commerce and retail, and banking and payments.
Another revealing ICO statistic – one that may help explain the lackluster post-ICO performance – is that nearly half of projects (46.6%) were merely ideas when they raised money. About a quarter (26.2%) of developers had created minimum viable products, 15.5% had launched an alpha version, just 11.2% had progressed to a beta version and 0.5% had full computer code.
Keep in mind that those numbers were only the ICOs that garnered a listing on a cryptocurrency exchange. Including those 89 projects, 412 ICOs were staged during the quarter, and 204 of them raised at least six figures.
Furthermore, 109 of the 412 projects didn’t even have a legal entity when they went public.
No wonder ICOs have attracted the scrutiny of regulators like the SEC in recent months.
Learn all about what an ICO is and how it works in our comprehensive guide to the topic.
Disclosure: At the time of writing, the author holds XRP, CND, ANT, DRGN, EOS, NEO, ADA, AION, GTO, SALT, QTUM, WAX, BTC and ETH.