With all the recent talk of securities regulation and November’s sharp dip in ICO fundraising, observers could be forgiven for thinking that the ICO model is in decline and opportunities are diminishing. But is that really the case?
As we head into the festive period, we provide some summary figures for 2017 – year of the ICO – to get a snapshot of how things have developed and to see if they can provide any clues as to how the market will develop in the new year.
Q1 – Little Sign of What Came Next
The first quarter demonstrated little sign of what was to follow. According to data from blockchain growth promoter ICOBox and crypto tracking website Coinschedule, only a dozen or so ICOs were launched in the first three months of 2017 raising less than $19 million between them.
That figure was half of the figure recorded for the last quarter of 2016 when the DAO debacle of the previous Summer had likely made investors wary of the ICO model.
However, by the Summer of 2017 that all changed with Bancor, EOS, Tezos and Filecoin all leading the charge as the showcase ICOs which turned heads, reaping hundreds of millions of dollars between them as part of a general wave of Crypto activity that coincided with Bitcoin’s breaking through the $2000 mark for the first time (May 20th).
Q2 – ICO Numbers Moon
The total market cap of cryptocurrencies breached the $100 billion mark for the first time in July with the flow of ICO projects a major contributor to this explosion in activity. Over $995 million was poured into June projects alone.
The number of ICOs continued to come thick and fast with one estimate from Piccolo Research placing the number at an estimated ten a day.
September saw ICO monthly capital-raising revenues peaking at just over $800 million, with October finally indicating some slow-down as that figure dropped to just over $600 million.
November, on the other hand, saw a drastic fall with total revenues amounting to less than 20% of October’s figure. That may in part have been due to a lag in impact of the Chinese and South Korean ICO bans in September.
The month of December, however, saw something of a revival with Blockstack raking in $52 million alone. To put this is into some kind of perspective, the Ethereum token sale raised $19 million back in 2014.
For an overview of the spectacular growth in ICOs since then, you may want to take a look at the interactive bubble chart produced by Elementus. Their figures suggest that ICOs have accounted for over $6 billion in revenues in total, with around $4 billion of that figure coming in 2017 alone.
Those figures, however, have been challenged by at least one academic study which have suggested that common estimates for total ICO revenues are likely below the mark and should be placed at something nearer to the $10 billion mark for 2017 alone.
As some commentators have been observing, 2018 looks set to be the year of cryptocurrencies entering the mainstream, with Bitcoin derivatives likely bringing in significant interest from the traditional institutional investor space.
As ICOs seem set to be an integral part of the more general interest expressed in the cryptocurrency phenomenon, 2018 may just be the year that we begin to see mass adoption of blockchain-based products.
That in itself will likely signal the beginning of a more general move towards the tokenised economy that some have been predicting.