According to recent statistics on ICOs (Initial Coin Offerings), the green days for the crowdfunding process may have long passed. This may suggests that ICOs are gradually dying.
Crypto start ups didn’t find it very difficult to raise the needed funds for the development of their projects during the 2017 crypto bull season. However, 2018 has not greeted the fundraising mechanism with softhand; many ICOs find it very difficult, if not impossible to meet their soft caps.
According to Diar (a digital asset newsletter), the month of November recorded the lowest inflows into initial coin offerings (ICOs) in 2018; with only $65 million raised during the month. This figure stands in sharp contrast to the amount raised during this year’s best-performing month, February, when $2.6 billion was raised through ICOs.
This November figure is also an insignificant proportion of the $12.2 billion raised so far during the year through ICOs.
Prior to November, the worst-performing month had been September when US$180 million was raised through ICO issuance. This figure is almost three times the amount that was raised through ICOs in November.
Several factors may be responsible for decline in the performance of ICOs this year; crypto bear market, tight regulations from authorities, multiplicity of scam ICOs and high degree of failure to develop ICO projects by development teams.
The entire cryptocurrency market cap has dropped by over 85% from its all time high with many altcoins recording as high as over 95% drop in value. The United States Securities and Exchange Commission and other regulatory authorities have also played their parts through intensified regulations of the emerging cryptocurrency industry.
In addition, the rate at which scam ICOs emerge these days may have disincentivized investors from participating in ICOs. Many ICOs turn out to be scam at the end of their crowdsales; disappearing into the thin air with investors money. Another factor that may also be contributing to the dying of ICOs is the fact that many development teams have failed to deliver their promises as regards their projects.
Many of them present unrealistic whitepaper in order to convince and attract investors, only to end up finding it difficult, if not impossible to deliver what they stated. This usually affects the price of the affected digital assets at the exchange making investors to lose their money. All these factors may have contributed to the poor performance of ICOs in 2018.