ICOs Down 97% Year-on-Year, IEOs Pick Up Some of the Slack
ICO activity peaked at the end of 2017, with a spike in May and June 2018, before falling precipitously during the bear market.
ICO activity has fallen by as much as 97% year-on-year compared to May 2018, shows research by BitMex. Various factors affected the token crowd sale market, which was extremely hyped, raising hundreds of millions of dollars for early projects.
The lack of new high-profile projects and prospective platforms is one factor behind the decline. However, after the crop of platforms like EOS, TRON, Tezos, and Cardano, no similar ICOs have been seen. The hype and promises of those platforms also rode on the general optimism during the bull market in cryptocurrencies.
In 2019, only in March ICOs managed to raise above $104 million. After that, ICO data shows that May arrived with another slowdown in funding, with around $31.9 million raised so far. ICOs are still happening, though on a much more limited scale.
On the other hand, Initial exchange offerings, or IEOs, have raised around $40 million this year, based on Bitmex data, mostly due to the fact that the exchanges were offering limited buying, to curb personal risks.
Both types of token crowd sales, however, are an extreme risk for buyers. Just as many ICOs went underwater, for IEOs, performance has been questionable, with projects like VeriBlock sinking below the token sale price. For other projects, Bitmex noted that secondary market trading brought mostly losses in the past weeks.
“With respect to all but one of the tokens, investors have earned strong positive returns based on the IEO price. However, after the tokens begin trading, the investment returns have typically been poor,” the researchers noted.
BitMex also pointed out the most active niche exchanges offering IEOs, which include Exmarkets, BW, Coineal, and Probit. Those operators have multiple IEOs lined up, while larger exchanges like Binance, Huobi, and OKEx, are more conservative, taking their time to select the next project.
Another specific feature of IEOs is that only a very small fraction of the supply was offered to exchange-based buyers. The teams have kept significant stores of the tokens, with the potential to liquidate if the markets develop.