If you invested in an Initial Coin Offering (ICO), a crowdfunding tool for crypto companies, in 2017, there's a very good chance that your portfolio was shredded, according to a study by consulting firm Ernst & Young. 19659002] In a report dated October 19, titled "ICOs, The Class of 2017 – One Year Later," Ernst & Young said in the first six months of 2018 that 86% of leading ICOs joined a crypto exchange in 2017 were listed under their initial listing price. In addition, a portfolio of these ICOs has fallen 66% since the peak of the market.
Lack of due diligence by investors and lack of understanding of the burgeoning and often dishonest market caused the ICO ratings to rise to an extreme level, leading to a major crisis case of the FOMO (fear of omission) that eventually slammed, the company said Report. "Despite the hype surrounding ICOs over the past year, there seems to be a significant lack of understanding of the risks and rewards of these investments," said Paul Brody, Blockchain, Ernst & Young's global innovation leader.
"While ICOs are a whole new way of raising capital, participants should understand that there are factors ̵
This Excessive Risk The total value of all cryptocurrencies rose to more than $ 800 billion in January, before falling below $ 600 billion as the price of key cryptocurrencies like Bitcoin
BTCUSD, + 0.76%
ETHUSD, + 2.14%
lost more than half their value.
Read: The cryptocurrency market has lost more than $ 600 billion from its peak – what exactly happened?
In addition, Ernst & Young estimates that 30% of all ICOs have "lost substantially all their value". This is evident from a February survey by news.Bitcoin.com, where 46% of all 2017 ICOs have failed in funding or in business stage.
Further reading: Nearly half of all ICOs in 2017 failed
But investors seem to be enjoying themselves. Whether it's the increasing oversight of regulators or documented failures, the flood of alternative crowdfunding tools is diminishing. Of the $ 21.4 billion raised so far in 2018, $ 17.2 billion was spent in the first six months. July, August and September were three of the five slowest months, according to data from CoinSchedule.
Read: ICO fraudsters have fled into investor's dough with $ 100 million, says research firm
Nevertheless, those who are considering a dabble in the ICO market should proceed with caution. "The amount of reward in this market currently does not look like it justifies the associated risks," he said.
The survey collected data on projects conducted by ICOs and a detailed analysis of the top 141 projects, which collected 87% of all ICO revenues between January 2018 and September 2018.
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