ICO

ICO Slowdown as Funding Drops 44% in April

JP Buntinx | May 1, 2018 | 10:30 am
ICO
ICO

ICO Slowdown as Funding Drops 44% in April

JP Buntinx | May 1, 2018 | 10:30 am

The initial coin offering industry has attracted a lot of attention. Projects have raised hundreds of millions with relative ease. That momentum is seemingly coming to an end as of right now. Funding of ICOs throughout April was the lowest in the past eight months. An unsurprising development, although the total amount of money raised is still pretty significant.

What is Going on With the ICO Industry?

The past year has been rather crazy for all initial coin offerings. Various mega projects raised $100 million or more in rather quick succession. Tezos is one of the biggest companies in this regard, although its efforts did not go off without a hitch by any means. All of these successful campaigns attracted the attention of regulators around the world. Not all of the outcomes are positive in this regard.

China has officially banned all ICOs and South Korea has taken a similar approach, although that situation may be reversed in the coming weeks. In the US, the SEC is actively cracking down on coin offerings which did not adhere to securities guidelines. It has created a lot of pressure on the ICO industry as a whole, effectively disrupting the funding process.

ICOData.io indicates the funding for ICOs throughout April 2018 was very low. So low even that it is the least successful period in the past eight months. Albeit $543 million was generated in token sales, it is a 44% decline compared to March. This is an ongoing downtrend, as the amounts raised have been on the decline since January of 2018.

Will the Hype Surrounding ICOs Resume?

Given the hype and speculation associated with initial coin offerings, this may be a temporary blip. Some experts will claim the ICOs are losing their appeal, mainly because there are too many projects. Most of those concepts do not have a working products months after raising millions of dollars.  To top it all off, almost one in two projects failed before of after funding, which is not a positive indicator.

Even so, there is still a genuine interest in this business model. Companies will continue to organize ICOs as a way to generate funding and realize their vision. All the money in the world won’t make a project successful if the team is incapable. With no working technology prior to raising money, the outcome can still be negative in the long run. Only time will tell how things will play out for ICOs in this regard.

More versatile fundraising platforms can offer a long-term solution. These concepts take care of most legal issues associated with initial coin offerings which still providing a way to raise millions of dollars. Vitalik Buterin’s DAICO model, for example, is getting a lot of attention in this regard. This industry is still in the early stages and a lot of things can and will change in the future.

 

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