ICO Activity Down 90% This Year, The Research Shows
According to research, ICO activity this year has decreased by 90%
In September of this year, the activity in the field of initial coin offering (ICO) decreased significantly. From an amount of about 3 billion US dollars raised at the beginning of the year through the token sale, the volume fell to less than 300 million in September, which corresponds to a 90% reduction. This showed an independent study conducted by Autonomous Research.
ICO activity plummeted
Autonomous Research specializes in global studies of banking, insurance, finance, information services and investment. It is an independent research company, which was founded in 2009. Its division is Autonomous Next, which focuses on “the impact of technology on the future of finance”, which explores technologies in the field of digital currencies and related technologies.
According to a study published by the company, taking into account small private tokens, such as, for example, EOS, about 400 million dollars were collected a month before, and in September the amount raised by ICO-projects did not reach 300 million dollars. In January of this year, the total amount, including small private tokens, reached $ 3 billion. As a result, the fall in monthly fundraising fell by 90.7%. The general trend is declining, indicating a loss of investor interest in the ICO market.
Investors lose interest in ICO
According to researchers, there are several likely reasons for the fall in investment activity in ICO. The decrease in the value of the very idea of participation in the ICO and the purchase of tokens due to the lack of legal regulation and the usefulness of the tokens by themselves, researchers call the primary cause of the fall. Many investors prefer to buy shares in these companies than tokens.
Also, studying the Pitchbook data on the growth of venture capital in the Bitcoin sphere, cryptocurrency in general and the blockchain technology as a whole, the company found that there is a decline in this area too. Apparently, the reason for this situation is that many fintech companies, such as Revolut or Robinhood, turn their attention to the cryptoindustry.
Security Token Offers (STO)
The next reason for such a significant decline in investor interest in ICO, researchers called the emergence of security token offers. ICOs can now be equated to securities, according to the statement of the US Securities and Exchange Commission (SEC), so that they will fall under its jurisdiction. Thus, STO it is now a security and has more value than ordinary tokens. However, researchers from Autonomous Research believe that the sale of secure tokens in the next year or two will not gain full strength.
Further, Autonomous Research calls another reason for the fall of the ICO market for more than 90% of the problems that have arisen in the Chinese market of cryptocurrencies and everything associated with them due to the legislative ban on operations with cryptocurrencies, including the holding of ICO. Starting in 2015, a crisis began in Chinese P2P lending, and yet the Chinese market is one of the largest in the world.
The largest cryptocurrency platforms were based in China, and then they were forced to leave the country in order to be able to continue functioning. In the domestic market of China’s cryptocurrency, the demand for them, as well as the tokens, continues to be high, and P2P lending is only becoming more popular every day, despite the ban on the use of cryptocurrencies operations.