New research published by finance company GreySpark Partners and reported by The Next Web found that the ICO market behaves in a peculiar way. For each stellar success in fundraising, there are a couple of ICOs that don’t manage to raise any capital at all.
No, this is not about the projects that don’t manage to reach their goals. We’re actually talking about a literal zero-dollar flop that led absolutely nowhere.
Out of the 1,921 ICOs that GreySpark looked at, a whopping 890 of them (46.3%) raised absolutely nothing.
367 projects, however, managed to raise over $10 million, with a tiny proportion—12 of them—raising over $100 million.
Counting all of the projects that managed to raise over $1 million, we get 896 ICOs, just a few more than the number of ICOs that don’t raise anything. The results of this analysis show that ICOs are extremely polarized in their behavior; they either raise an immense amount of capital or don’t raise any at all.
Whether the successful ICOs actually manage to stay on schedule and realize the goals of their projects is another story entirely. Investment-wise, ICOs are not just a risk but also exhibit a particularly unique pattern of failure.
As we venture further into the report, we see that investing in an ICO is not for those who are patient with returns. Although, on average, token sales yield returns of 34-40% within six weeks, this only applies to projects that weren’t just some pipe dream and actually managed to deliver a promising viable product.
For the most part, the research shows that the myriad unsuccessful projects GreySpark analyzed only achieve explosive returns as long as the hype train moves. After six weeks, one can expect the returns to slow down significantly if they haven’t extinguished entirely.
According to this research, the likelihood of returns for investors in a large proportion of ICOs will evaporate as time passes. In short, HODLing is generally not good advice for tokens at this time.