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ICO Market Doubled in a Year, Investing up Ten-Fold

Initial Coin Offering–Despite the sinking price of cryptocurrency across the market, initial coin offerings have managed to fair well in terms of growth through 2018. While the entire industry is embroiled in a bear cycle that has continued into the eighth month of the year, ICOs have doubled since 2017, while drastically increasing the amount of investment funds.

According to a report by ICORatings, a website that publishes independent research about upcoming and launched projects, the entire ICO market has doubled within the last year, with projects having already raised $11 billion throughout 2018. To put that figure in perspective, ICORatings reports that ICO investing through Q1 and Q2 in 2018 is ten times that over the same period last year, showing a substantial boom in investing in new coin projects. While the ICO market has drawn significant criticism over the last several months due to the propensity for scams, empty projects and unproductive profit seeking through cryptocurrency, the overall health of ICO investing appears to be thriving.

The report includes specific details about Q2 2018, stating that 827 new projects raised over $8 billion in funding, up from $3.3 billion in Q1. The 151 percent increase through the second quarter of the year is reflective to the interest generated by cryptocurrency, in particular the low barrier to entry for startups and developers that is afforded through the initial coin offering model. However EOS, currently the fifth largest cryptocurrency by market capitalization, made up the largest share of the ICO pie,

“Funds raised by EOS project account for most of this increase, they have collected $4,197,956,135 for a year-long ICO.”

ICORating also highlights Europe as the leader for all ICO projects, launching 46 percent of new developments this year, with North American investors contributing the most capital. In addition, the report mentions that Asia has seen an increase in investment capital flowing into ICOs, despite a decrease in the overall number of projects launched.

While the current atmosphere surrounding cryptocurrency and Bitcoin hinges upon the U.S. Securities and Exchange Commission’s ruling on the creation of a BTC ETF, ICOs have already started to incorporate larger amounts of institutional investors. The report shows that institutional capital in ICOs is on the rise, while retail investment continues to decline. ICORating finds this to be a favorable position for the growth of the ICO market and general well being of cryptocurrency, as greater institutional interest leads to higher standards in the development of the projects. In addition, the fundraising of ICOs will become more dependent upon “how well projects cooperate with investment funds,” thereby raising the standard across the industry.

Despite the positive news published by ICORating on the growth of the market, reports earlier in the year revealed the industry still has room to grow in terms of achieving higher quality. A study published by Statis Group found that 80 percent of ICOs in 2017 would fit into a category of “scam,” relaying the experience of investors who have found themselves duped by empty projects or teams that run off with investment funds. However, most have recognized that ICOs offer a high degree of innovation as a model for funding new projects and, despite the bad actors filling the space, are helping to grow the industry in terms of development. 


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Cryptocurrency ICOs are Overvalued, Says Brian Kelly

Brian Kelly believes the current ICO market is overvalued. Kelly was commenting on the space of the crypto fundraising ecosystem during a recent interview on CNBC. Brian Kelly is the founder of BKCM, a digital currency investment firm.

The ICO Market is Inflated

According to Kelly, the currency Initial Coin Offering (ICO) market is inflated. Thus, many investors are electing to keep their powder dry concerning getting into the market. Kelly went to say that:

People are starting to say, ‘I’m going to put the brakes on the ICOs right now. I’ve got my portfolio. I don’t need a seventh or eighth ICO. To me, [ICOs are] not as hot as they used to be.

ICOs were something of a revelation in the cryptocurrency industry in 2017. In fact, apart from the meteoric rise of Bitcoin prices, the other significant news throughout the year was the increasing popularity of ICOs. However, despite the popularity of ICOs even attaining much higher levels, Kelly believes the market has become supersaturated. He also described the ICO space as being “frothy.”

The Emergence of Dollar-denominated Crowdsale Campaigns

The BKCM CEO also highlighted an emerging trend that is becoming popular in the industry – dollar-denominated crowdsales. According to Kelly ICOs are being funded with the U.S. dollar instead of cryptocurrencies like Bitcoin and Ether. Kelly explained the reason for the new trend, saying:

Investors are actually looking to buy ether, to buy bitcoin, to buy some of these big protocols, these platforms that everything is being built on.

So, in effect, many people aren’t investing in crypto/blockchain projects because they buy into their key value propositions (if any) but are doing so to obtain cryptocurrency tokens that could later be exchanged for Bitcoin and Ether. Of course, for such a strategy to work, the tokens will have to “pump” considerably and sold off at the right time.

2018 Surpasses 2017 in Total ICO Revenue

Still only less than half of 2018 gone by so far, yet there have been more than 300 ICOs launched. This number is almost equal to the total number of ICO campaigns launched in the whole of 2018. Despite this development, Kelly isn’t buying into the hype even though crypto crowdsales have accrued more revenue in 2018 than in 2017.

Telegram played a prominent role in the record revenue figures seen so far in 2018. The messaging service carried out a $1.7 billion crowdfunding campaign before canceling it in May. Other projects like TaTaTu, a blockchain-based social media service managed to raise more than half a billion dollars from the sale of its tokens.

The U.S. is Lagging Behind in the ICO Market

Kelly brought up the point that the United States is way behind based on its involvement in the cryptocurrency crowdfunding market. The SEC has increased its scrutiny on ICOs making it difficult for many entrepreneurs to host their campaigns in the country.

Meanwhile, countries like South Korea and Thailand are in the process of clarifying their ICO regulations. This development would mean even increased fundraising activities in Asia.

Do you agree with Brian Kelly that the ICO market is inflated? Have you participated in any ICOs in 2018? Keep the conversation going in the comment section below.