Report: ICO projects surviving despite steep Ethereum market cap drop

ICOs raise $5.46 billion

Report: ICO projects surviving despite steep Ethereum market cap drop

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$5.46 billion raised by ICOsNew research from BitMEX and TokenAnalyst looked at 222 ICO projects and found the big drop in market cap for Ethereum during the past year has not resulted in losses so far.

“At the macro level, the projects appear to have already sold almost as much Ethereum as they raised (in US$ terms). Of the Ethereum still held by the projects, even at the current $230 price, projects are still sitting on unrealized gains, rather than losses,” the report says.


ICOs raised more than $5.46 billion


BitMEX ICOs report

The 222 ICO projects raised more than $5.46 billion, including $3.82 billion raised by EOS and another $1.64 billion by other projects.

Projects sold some of their ETH to continue funding project development, resulting in a net balance of $830 million according to the analysis by TokenAnalyst.

Ethereum’s price has dropped by nearly 85% from the $1,400 peak in December 2017 and currently hovers at $230.


Drastic selloff never happened


$5.46 billion raised in ICOsThe report said despite the steep decline in Ethereum value, panic selling never occurred.

“The large fall in the value of Ethereum led some to question if there could be a “downward price spiral” due to the concentrated Ethereum holdings of the ICO projects. The theory being that many ICO projects were sitting on a large treasure trove of Ethereum and that as the price of Ethereum fell, these projects were going to “panic sell’, fearful of being the last project holding their Ethereum bags,” the report continued.

Researchers estimate ICOs still hold 3.8 million Ethereum or an estimated 25% of the funds raised – approximately $830 million.


Top 10 ICOs in 2017


The 10 largest ICOs raised significant funding, mostly in Ethereum. The list of total funds raised by these top 10 as reported by Token Data includes EOS ($$4.23 billion), Tezos ($230.6 million), Filecoin ($200 million), Sirin Labs ($157.9 million), Bancor ($153 million), Polkadot ($144.3 million), Status ($107.7 million), Envion ($100 million), Kin ($98.5 million) and TenX ($83.1 million).


Report conclusions


ICOs raised billions in 2017The report concludes ICO projects or teams had much lower exposure to the price impact for Ethereum than expected.

“As a tool to raise funds, the ICOs have clearly been a phenomenal success, to such an extent that even a further significant fall in the value of Ethereum will barely make a dent into the success,” said the report.

The report said that the level of accountability is low for how funds are utilized, sold or held. Many projects are also competing for developer talent.

The report concludes somewhat pessimistically:

“One could argue that the volume of capital obtained by these ICOs could inflate the cost of these resources (perhaps the less experienced developers). This may not only plague the crypto-currency ecosystem with higher costs but also to some extent some startups in the wider technology industry, for many years.”

In this brave new world of ICOs, there still are few rules and wary investors and concerned regulators have cause to monitor the new cryptocurrency market carefully.