A newly published research report indicates that over two-thirds of small cryptocurrencies are currently trading below their initial coin offering (ICO) sale price—a situation commonly referred to as "breaking issue."
According to a report by cryptocurrency research firm Diar, 562 ICO tokens outside the top 100 cryptocurrencies by market capitalization have collectively lost $5 billion in value relative to their original fundraising valuations. Among these, 70% of these tokens are now in a loss position.
It’s important to highlight that this significant deficit does not even account for the value of tokens retained by development teams or those not available through public sales. In some cases, this could mean the post-ICO performance is even more disappointing, depending on how many of those reserved tokens have entered circulation.
Even more striking is the fact that, despite the presence of hundreds of cryptocurrency exchanges, 324 tokens that raised a total of $2.3 billion are still not listed on any exchange. Another 44 tokens, which collectively raised $1 billion, are listed on at least one exchange but have almost no trading volume. This includes the token Bankera, which raised $150 million.
Among the worst-performing ICOs highlighted in the report is Sirin Labs’ SRN token, developed for its “blockchain phone Finney.” After raising $158 million in its ICO, SRN’s market value has plummeted by over $141 million, falling more than 89% in just nine months.
Diar’s latest report lists the top ten worst-performing ICO projects, with Sirin Labs’ SRN ranking first.
Part of SRN’s sharp decline may be due to unexpected competition in the blockchain phone market. For instance, leading smartphone manufacturer HTC also plans to release a blockchain phone, the HTC Exodus. HTC holds nearly 10% of the global smartphone market share.
The second worst-performing token is PumaPay (PMA), which raised $117 million but is now valued at only $15 million. Similarly, Envion (EVN) and Paragon (PRG) each raised nearly $100 million, but their current market capitalizations stand at just $4 million and $3 million, respectively.
ICOs Raised Up to $20 Billion in 2018
Interestingly, the sharp decline in returns does not seem to have deterred investors, even as overall public interest in cryptocurrencies has reached relative lows. According to CoinSchedule, which tracked 789 token sales launched this year, blockchain startups raised over $20 billion in 2018 alone.
Some of these figures are notably large. For example, Venezuela’s state-backed petroleum cryptocurrency reportedly raised $735 million. The report suggests that even amid a bear market and increased regulatory scrutiny, interest in this new form of fundraising remains strong. If CoinSchedule’s data is taken as a conservative estimate, ICO fundraising exceeded $1 billion every month in 2018 except for July and August. By comparison, total token sales in 2017 amounted to $6.2 billion. It’s worth noting that EOS’s $4 billion crowdfunding effort began in 2017 but concluded in 2018, so it was counted in the 2018 totals.
Despite the substantial amount of capital raised through ICOs in 2018, individual projects often struggled to meet their fundraising goals. According to CoinSchedule, only 20 token issu exceeded their targets, while 402 (51% of the total) raised less than half of their intended amount.
Investors Swing for the Fences
One possible explanation for the enduring popularity of ICOs is that investors are willing to place multiple risky bets, hoping that one or two will yield substantial returns.
Diar’s report notes that although the overall returns for ICOs outside the top 100 cryptocurrencies are poor, those that have managed to break into the top 15 have delivered significant returns for early investors. For instance, Cardano, IOTA, Tron, and NEO raised a combined total of $137.3 million. Even after falling 80% from their all-time highs, these tokens have a combined market capitalization of nearly $6.4 billion, representing a return of over 4,500%.
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Frequently Asked Questions
What does it mean when a cryptocurrency is "below ICO price"?
It means the current market value of the token is lower than the price at which it was initially sold during its fundraising event. This often indicates poor performance or loss of investor confidence.
Why do so many ICO tokens fail?
Many ICOs lack sustainable utility, face regulatory challenges, or operate in highly competitive markets. Some projects also suffer from poor execution or inadequate adoption after the token sale.
Are all ICO investments risky?
While all investments carry risk, ICOs are particularly speculative due to their unregulated nature, market volatility, and the early stage of many projects. Thorough research is essential before participating.
Can ICOs still be profitable?
Yes, though the landscape has become more selective. Tokens with strong fundamentals, clear use cases, and experienced teams are more likely to succeed, but overall returns have diminished compared to earlier years.
How can investors identify promising ICOs?
Look for projects with transparent teams, functional prototypes, active communities, and clear regulatory compliance. Avoid projects that promise guaranteed returns or lack technical substance.
What are alternatives to ICO investing?
Other crypto investment avenues include established cryptocurrencies, security token offerings (STOs), and decentralized finance (DeFi) projects. Each has its own risk and regulatory profile.
Disclaimer: The data in this article is based on third-party reports and is provided for informational purposes only. It does not constitute investment advice. Readers should conduct their own research and consult financial advisors before making investment decisions.