The 2018 cryptocurrency markets, famous for two things, the crypto boom which helped lift Bitcoin to $20,000.00 and of course, a surge in ICO adoption. 2018 saw a record amount of Initial Coin Offerings (ICOs) take place. During this time, an awful lot of ICOs did fail, for obvious reasons too, some, however, did manage to take off and in turn ended up funding some of 2018’s crypto success stories.
As we enter 2019 however, we have to explore how ICO culture has changed over the year, in line with the sinking optimism following the markets. ICO funding is down by a huge amount, December 2018 marked the lowest funding totals through ICO campaigns across the entire year, in a trend that has only continued into 2018. According to icodata.io, in January 2018 the markets saw around $1,400,000,000 raised via ICO campaigns. By December however, this number had sunk to less than $100,000,000 after a steep decline through the year.
According to Hackernoon, in 2019 so far, we have only seen around $20,400,000 raised in ICO funding, that’s a 75 x decrease from this time last year. ICO culture is changing rapidly, we need to work out why.
A number of experts have spoken to Hackernoon to discuss just why the industry no longer seems to care about ICOs, here’s what a few of them had to say.
Bruce Fenton, the CEO of Atlantic Financial has said:
“We believe the the ICO model of 2017 and 2018 was flawed and won’t return. There was a lot of hype, which led to funding of projects without solid prospects or terms. Many were also questionable from a regulatory standpoint.”
Arianna Simpson, the MD at Autonomous Partners has said:
“The ICO market has dropped dramatically since what we saw in 2017 and early 2018. Many investors (especially retail) were burned and have been slow to want to reinvest. Given the dramatic fall in prices that we’ve witnessed across the market, projects are avoiding doing ICOs and opting for equity rounds or private token sales (which have also been reduced, but to a lesser degree). I think the ICO market will remain weak in 2019.”
What’s our take
Sadly, one thing that followed ICO culture in 2018 was the idea of scams. Many scam ICOs managed to fool investors into losing quite a lot of money, the more scams that got exposed, the less excited people felt about ICOs. We should also consider the bear market, as people’s portfolios have shrunk over the year, they have far less money to spend on ICOs and therefore cannot afford to invest in new projects, not when ICOs are so risky to invest in the first place.
2019 has marked a big change in the way ICOs exist and of course, in the way new companies seek investment. The blockchain world is a generous one, perhaps a little too generous during the 2018 hype-era. Lessons have been learned, ICOs remain, but for how long? That’s a question we can’t answer.