A recent research report claims that almost half of all initial coin offerings (ICOs) in 2017 and 2018 failed to raise any funds. On the other hand, the other 40% raised more than $1 million each.
The research report entitled: “Charting the growth of cryptocurrencies” was conducted by the Research Lead, William Benattar, and the Research Analyst, Meri Paterson. The report focused on the exploration of “the fundamentals and dynamics of the crypto industry. Specifically, the research focuses on the growth and institutionalization of the space as well as the development of the regulatory landscape.”
GreySpark Partners, a research and consulting firm, has been studying the ICO market these past few years. Recently, they found out that around 890 tokens were unable to raise any funds at all. In almost a stark contrast, 743 tokens were successful in hitting the $1 million mark.
GreySpark has also emphasized on the report that a lot of token projects failed to provide a positive return-on-investment, as time passed. Findings on the report were based on data from ICOData.io and ICOCheck.com through August 2018.
This has caused anxiety regarding the future of ICOs. According to numerous developers, the gradually dropping number of token sales is to be blamed on regulations, better-informed investors and even market saturation.
The report suggests some more technical reasons as to why this had happened and why it might continue happening. They cited the reasons as “lack of traction, disappointing product advancements, scams, difficulties in execution, no market and poor marketing or go-to-market strategy.”
On the other hand, crypto-hedge funds seem to be progressing.
Based on the report, the number of hedge funds fixated specifically on cryptocurrency projects and tokens has had a significant increase to a total of 146 firms since September, even with an initial drop in January of this year. This is an increase from 9 crypto-focused hedge funds dating back in 2012.
In accordance to the report, the difference between a traditional hedge fund and a crypto-hedge fund is that the latter consist of mostly long positions that involve higher risks.
The analysis also predicted that the number of crypto-hedge funds will grow to 160 to 180 by the end of this year.