ICO FUNDING COOLS DOWN: Initial coin offering (ICO) funding is undergoing a significant pullback, per data from Crunchbase and CoinSpeaker. As of August 19, only three ICOs had raised $25 million or more during Q3 2018. This represents a 78% decline from Q2, when 14 ICOs raised $25 million or more. Meanwhile, Q1’s number was even higher, at 32. According to CoinSpeaker, total ICO funding stood at $617 million for August as of the 19th. In contrast, $926 million was raised by ICOs in July, and $1.75 billion was raised in May. This points to a stark cooling in ICO activity, likely tied to the steep declines hitting the crypto industry in 2018.
- The crypto market has lost nearly three-quarters of its value since January. Since the all-time highs for major cryptocurrencies at the start of 2018, digital assets have undergone significant price losses, according to Coinmarketcap. Bitcoin is currently trading at a third of its all-time high of close to $20,000, while Ethereum has seen over 75% of its value wiped off since exchanging hands at over $1,300 in the middle of January. During these highs, total market capitalization for cryptos was around $829 billion, a figure that now stands at around $230 billion, marking a more than 70% decrease.
- Additionally, a number of reports have highlighted the high failure rate of ICOs. For example, researchers at Boston College found that, out of 2,390 ICOs, a mere 44% remained active post fundraising. Similarly, PwC research found that, out of 3,470 ICOs, only 30% managed to close their fundraising successfully.
This data suggests there is a growing cleavage between blockchain and crypto. While ICOs initially caught the attention of investors, their hyper-volatility and the proliferation of scams and failed projects seems to be dissuading ongoing capital injection into the space. However, investments in, and developments of, blockchain-based projects continue at pace, with the World Bank’s $80 million blockchain-based bond raise serving as a prime example. This suggests that the crypto hype is falling away as investors and institutions show greater belief in the promise of the technology underlying these digital assets.