ICO funding drops to its lowest in 16 months in August
Initial coin offerings (ICOs) in August raised the lowest amount seen for crypto start-ups in 16 months after a stuttering decline since digital asset prices hit record highs in January.
Data from Autonomous Research showed that ICOs raised only $326m in August, the lowest amount raised by this method of funding since May 2017.
The record, set in January this year at $3.08bn, coincided with a massive rally in cryptocurrency prices, with many existing tokens hitting their record highs during the same month. February and March were also strong months for ICOs, raising $3.01bn and $2.78bn respectively.
A subsequent sharp fall in digital asset prices, however, began to weaken enthusiasm. So too did rising levels of financial fraud, as scammers marketed fake ICOs through social media and the internet.
Caution over scams
Data from Satis Research in August showed that between July 2017 and June 2018 nearly 80% of global ICOs were scams – although the total amount stolen from investors by scam ICOs was only a fraction of the funds raised by genuine coin offerings.
US financial regulator the Securities and Exchange Commission became so concerned about the levels of scam ICOs that it took pains to warn investors, creating its own scam ICO website launching the so-called HoweyCoin, to show investors what to look out for.
Ethereum’s blockchain has been by far the most popular ledger for launching ICOs in 2018 with nearly 70% of all projects issuing their tokens on the Ethereum platform. Indeed, the sharp fall in price in ether, the Ethereum Foundation’s native token, during August – down 32% – has been attributed to the fall in ICOs.
Here’s how the rest of the year has worked out so far: in April $1.84bn was raised, in May $2.28bn, June $1.41bn and July $1.52bn.