Crypto Frontline

In a move that should have been predictable, the ICO activity had been gradually losing steam during 2018. Even though the record set during last year had been broken and for the first half of the year ICOs continued to grow despite bubble fears, what we are witnessing right now is a slower market, as a study conducted by Autonomous Research is showing.

Sharp drop in funds raised by ICOs

According to the study which you can find here, the situation is moving on a downward path, with the amounts raised by ICOs dropping from approximately $2.4 billion in January 2018, to $279 million last month in September. The trend had been down, with a string of declines interrupted just by the month of May, as you can see in the chart from the above link.

It seems like ICO investors had been increasingly worried, mainly due to the slump in the price of cryptocurrencies we have witnessed. Also, the main ICO vulnerabilities had started to show up gradually, contributing to the diminishing appetite for newly-created tokens.

As the above-mentioned study is saying:

We’re really trying to make this look good! But it’s not working. We’ve scrubbed token offering data from September, and the trend continues generally to be down. Last month saw about $300 million in ICO funds raised, with the month before that revised to a bit over $400 million, a far cry from the $2.4 billion in January of this year.

Why the interest had dropped?

According to the study, big investors (which is where most of the funds came during the past year) are not so willing to invest in any type of tokens, but instead, they are focusing on buying stakes in the companies that are behind the ICO.

Also, as we have written in the past there were a lot of ICO scams that proved to be just schemes to get money from people. Does it mean no one should invest in ICOs? Not necessarily. Surely there are some companies that want to innovate and use the blockchain technology in order to provide better solutions which can be integrated into the economy.

If those companies lack funding, ICOs can help them, but there should be a clear rule book and regulation which will act as a filter and stop scamming companies. Regulatory developments are still evolving slower than expected, so the downward trend in ICO funding could continue to slow down even further.