ICOs Dry Out in August as Funding Model Starts Feeling Obsolete

The summer of 2018 brought talk that initial coin offerings (ICOs) are on their way out, and August has offered clear evidence this fund-raising model is starting to fail, with large-scale, high-profile projects notably absent during the month, according to IcoData statistics.

So far, 2018 has been disappointing. In 2017, the ICO trend picked up strongly in June though some high-profile ICOs raised funds at the start of the year. The fall of 2017 marked the peak, while ICOs last year generated in excess of $6.1 billion, mostly in the form of Ethereum (ETH) and Bitcoin (BTC).

Overall, the first eight months of 2018 were successful for ICO initiatives, with more than $6.7 billion raised in total. However, there has been a noticeable drop over the course of the year, matching the general sentiment after the bear market and general price slide. The only exceptions were May and June, when fundraising efforts picked up.

In August, however, ICOs brought in just over $191 million, as per IcoData estimates. One of the reasons for this is the decline in ETH market prices. There have been 1,052 ICOs so far in 2018 compared to 873 for the whole of 2017, but the amounts raised this year have been smaller. Additionally, some ICO projects delayed their launch as the bear market generally wiped out enthusiasm for new coins.

One of the biggest attractions of participating in ICOs was the chance to sell at a higher price once the coin hit exchanges. However, some projects crashed and went on to trade below their ICO price. Additionally, a price recovery does not lift all coins anymore, and only individual assets see improved liquidity. For many ICO tokens, trading has ground to a halt.

At the same time, bots and aggressive promotions continue to hype startup projects and ICOs to social media users:

https://twitter.com/CryptoCoinForum/status/1034500663332483078

ICO scams have been noticed on all social media, with WeChat, one of the most popular platforms, exclusively targeting Chinese crypto enthusiasts

Another trend is shying away from widely publicized public sales, going for private placements instead:

https://twitter.com/dalb0013/status/1033689050878627840

There is also ongoing skepticism about teams being able to deliver.

https://twitter.com/VinnyLingham/status/1032752309829173248

Even ICOs with big teams sometimes take years to produce a marketable product. Smaller projects may not even make the effort, and some could be outright scams that never intended to deliver. Extreme caution and skepticism are crucial when choosing to participate in new projects, and it is better to wait out for exchange listings or seek airdrops instead of opting for ICO tokens to make returns.

Neither the author nor the publication assumes any responsibility or liability for any investments, profits, or losses made as a result of this information. Cryptocurrency trading and investing are risky propositions, and market participants are advised to always conduct thorough research.