Over the course of late 2017 into early 2018, the cryptocurrency world was rocked by the biggest boom in its history. Bitcoin’s price exploded from around $6,000 in mid July 2017 to just shy of $20,000 in December, and at the same time, the cryptocurrency market was flooded with billions of dollars being invested in initial coin offerings (ICOs) for developing new tokenized companies.
Since February 2018, however, the ICO market has been in sharp decline, as much of the hype surrounding ICOs appears to be wearing off. Much to the disappointment of overzealous investors, many of the ICOs launched during the boom have proven to be failures, if not outright scams. Indeed, a report published by a team at Boston College in June of this year reveals that more than half of ICOs launched fail after 4 months:
“Breaking it down by category, 83% of the 694 ICOs that don’t report capital and don’t list on an exchange are inactive after 120 days. For the 420 ICOs that raise some capital but don’t list, this figure falls to 52%, and for the 440 ICOs that list on an exchange, only 16% are inactive in the fifth month.”
In recent news, data published by TokenData.io illustrates just how much the ICO bubble has popped over the last two months.
1/ ICOs raised $400M in July 2018, the lowest level in more than 12 months
Crypto “bear market” finally evident in ICO numbers
No “mega” (>$100M) public sales in the past 2 months
Token prices continue to slide relative to ICO, BTC and ETH//t.co/xz4uFdlojb pic.twitter.com/s9NcDVcxCx
— TokenData (@TokenData) August 2, 2018
The Token Data report shows that to date, ICO investment totals have already doubled that of the previous year, currently estimated at $11.3 billion as of July 2018. However, between May and June 2018, ICO funding dropped by 75 percent followed by an additional 30 percent drop in July.
The rapid decline in ICO investments can likely be attributed to the struggles of the cryptocurrency market as a whole over the last couple of months. Although one must wonder regardless of a potential market turnaround if we will ever see ICO investments ever reach such heights again. Sure, some lucky investors saw ungodly 100x returns on their ‘hail mary’ ICO investments during the boom, but with so many ICOs failing and with so many others having been revealed to be outright scams, it is hard to believe the public will fall for the same cheap trick twice. Furthermore, there is now a movement with growing support for government regulation in this area, which might prevent a market overflow of overhyped ICOs from ever happening again in the future.
With the ICO boom possibly over, cryptocurrency supporters should perhaps be glad to see it go. The ICO boom madness did not do much to help the cryptocurrency market in the long term. Over the course of the boom, many investors lost tremendous amounts of money, scam companies ran off with investments that could have been put towards legitimate projects, and the cryptocurrency market as a whole began to garner a bad reputation in the eyes of the public.
With the ICO boom over, cryptocurrency can return to focusing on developing innovative new technologies and gaining support for legitimate mainstream adoption.