ICO Activity Down 90% Since Start of 2018

Initial coin offerings raised only $300M funds in September, a $2.7B decrease since January.

An independent study by Autonomous Research found that initial coin offering (ICO) activity globally has dropped over 90 percent this year. Despite the high of about $3 billion in funds raised by token sales at the beginning of this year, September investments were less than $300 million, according to the firm. The paper highlighted the fact the decrease is part of a downward trend.

“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. If we include EOS and other chunky private token raises, the highs go to over $3 billion, suggesting that monthly ICO activity is down 90%.”

Autonomous Research was founded in 2009. The firm offers global investment research in banking, investments, insurance, finance and IT services. Autonomous Next is the company’s UK branch which focuses on technology’s impact ‘on the future of finance’.

Three possible narratives

The paper went on to explore possible reasons for the trend. According to Autonomous Next, there are three ‘narratives’ that could drive the decrease in interest.

The first possible explanation -- investors losing faith in ICOs and instead opting for equity in companies that offer ICOs. To test this hypothesis, AN examined “Pitchbook’s data on blockchain and bitcoin venture capital raises,” and found a lagged effect in VC.

“Why is that? Two reasons: (1) fintech companies like Robinhood and Revolut pivoting into crypto and (2) Bitmain trying to vacuum up capital before the public offering.”

Security Tokens not replacing ICOs yet

AN pointed out to a second factor for the decrease in ICO activity -- security token offerings (STOs). “We know many different platforms working on this space,” said the paper, listing Templum, Tokeny, Sharespost, Indiegogo and tZero as examples. This view seems in line with blockchain consultant Michael K’ Spencer’s opinion, who recently published an article titled “STOs are the new ICOs”.

“In the latter half of 2018 and in 2019 we are therefore going to see a huge rise in STOs,” said Spencer in his article, “and they may eventually out-duel ICOs.”

However, Autonomous Next found STOs’ impact to be negligible, given they are not set to hit the market for another few months.

The last reason the company explored was the collapse of Chinese P2P lending services since 2015, and whether risk-seeking capital opted for ICOs. The Chinese government has cracked down on ICOs and crypto service providers, but token sale activity remains high in the Asian country. The paper asked people who are familiar with the Asian market to contact Autonomous Research.