Funds raised through Initial Coin Offerings have seen their lowest moment yet during the second half of 2018. The ripples associated with the macro cryptocurrency market could spill over to affect investor confidence. Data compiled by Autonomous Research has shown that Initial Coin Offering (ICO) funding has hit rock bottom. ICO startups collected $326 million last August; the lowest amount ever since May 2017.
Ethereum Dumping the Prime Culprit
The study shows that Ethereum blockchain-based Initial Coin Offerings were responsible for the tremendous price surge experienced throughout 2017. In the same vein, it has blamed lack of enthusiasm towards the same ICOs for the current price slide being experienced by Eth. Apparently, some projects could cash out to deal with expenses amid apprehension regarding the bearish market. The number and size of ICOs running may be sizable but it fades when compared to the $3 Billion monthly average from Q1 in 2018.
Having in mind that most token listings are based on the Ethereum blockchain, and that most projects will use ETH as their preferred mode of funding, one can almost conclude that the once preferred method of fundraising is getting to the plateau stage. It is this loss of enthusiasm and demand for Ether that may be the cause for the huge price slump cryptocurrencies, and especially Ether, have experienced during the last six months.
Ether is currently ranked at second position in the AltDex 100 Index which is the standard yardstick for the leading cryptocurrencies and tokens. A keen observer will notice that short-term interest in ETH is still rising towards an all-time high; the deduction is that most investors are putting a stake on expected losses.
ICOs Time Out?
The new research findings come at a time when regulators and legislators worldwide are getting concerned about ICOs. Members of the European Parliament met last week with blockchain experts to discuss the possibility of regulating ICOs. A member of the Taskforce observed the “dramatic increase” of ICO numbers and sizes in 2018, despite the high number reports on fraudulent ICO projects.
The new analysis comes as legislators and regulators globally express concern regarding ICOs.
Last week, Members of the European Parliament along with blockchain experts discussed possible regulations for ICOs. One member pointed to the “dramatic increase” of ICO volumes in 2018, despite the increasing number of reports on fraudulent ICO projects.
The chairman of the European Commission’s Taskforce on Fintech noted that ICO tokens were not “intermediated,” and since there were no third parties between investors and issuers, there was a need to consider intervention from a regulatory perspective.