Most Of ICOs In 2017-2018 Attract No Investors
Half of all ICOs, launched in the period from 2017 to 2018, did not attract investors’ funds. At the same time, another 40% of projects succeeded to raise more than $1 million each, according to a new study.
The report of the research firm GreySpark Partners covers the ICO market data for the past few years. The experts have found out that 890 initial coin offerings failed, without attracting almost any funds. Nevertheless, 743 such projects, on average, received investments of about a million dollars each.
The researchers note that, in time, a lot of projects lose their payback for several reasons, including lack of support, difficulties in performing, fraud, poor marketing strategy, and lack of demand. However, the chart from the report shows that a third of projects pay off the invested funds and bring 40% of profit in six weeks.
The analysts concluded that institutional trading in the cryptocurrency market is still poorly developed, compared with other assets markets. The main problem is the absence of reliable custody services, like such large banks as Northern Trust in traditional finances. Also, investors face volatility, which affects the prices and assets liquidity.
Experts at GreySpark Partners have found a positive moment as well — the number of cryptocurrency hedge funds has increased significantly over the past two years. Currently, there are 146 specialized firms. For example, in 2012 there were only nine of them. Hedge funds, working with cryptocurrency, mainly consist of long positions with high risks, the report says.
Previously, the head of an investment firm explained why investors would no longer invest in ICOs without doubt.