From Shipwreck To New Life: Venture Capitalists Save The Day For Blockchain Companies & ICOs
From Shipwreck To New Life:
Venture Capitalists Save The Day For Blockchain Companies & ICOs
In the first weekend of 2018, Cryptomarkets peaked to an all-time high with more than $60 Billion of cryptocurrency traded within 24 hours and the total market capitalization reaching over $830 Billion. Over the course of the next month, the entire market witnessed a free fall — crashing 65.37% to a total market capitalization to just $277 Billion.
For skeptics, this correction was a pivotal opportunity to combine effort and discredit the value of cryptocurrency assets. This effort could be seen on a majority of news websites in the form of fake news about ICOs and cryptocurrencies.
Every Action Has A Volatile Reaction
Here is a line graph with 4 vertical lines dividing the market into 4 distinct times between July 1 and Sep. 30, 2018. The graph plots the RoIs of the top ICOs.
Each line (A, B, C, D) is carefully placed to map a specific news or event which may have affected the market with either a bearish or a bullish sentiment.
A) The Bear Signal
Here, we see prices quickly drop after what was a 2-week long bull run. This is an example of a sentiment shift due to a couple of big names throwing their weight around.
- A prominent Bitcoin ETF was rejected.
- A poorly researched report that pointed to the fall in ICO funding from Q4, 2017 to Q1, 2018.
This had skeptics jumping on the bandwagon and spreading false claims and exaggerated reports breeding Fear, Uncertainty, and Doubt (FUD).
B) The Stable Climb
There was a clear sense of confidence growing in the air. Prices were climbing up steadily.
C) Reddit Investigation Goes Viral
A Reddit investigation found that a wallet linked to the original Silk Road with 111,114 BTC recently started to move its holdings for the first time since 2014. Of the holdings, approximately 11,114 BTC were moved to Bitfinex and 4,421 BTC were moved to Binance.
Alleged fake news spread by Business Insider stating that Goldman Sachs was abandoning its plans to trade in cryptocurrencies.
D) BitMEX outage
Just a few hours after a seemingly manipulated pump added over $12 Billion to the total market capitalization. Bitcoin spiked to a peak of $6,800 on 21-Sep, 2018 when BitMEX had a temporary outage causing anomalous trade volumes.
Also, Google announced that it will end its all-out ban on cryptocurrency advertising.
Fast Forward To Today
The market confidence is growing again as Bitcoin, the poster child of crypto has established its bottom with solid support at $5900.
The ICO buzz
The United States saw the highest number of ICO rounds with a total of ~150 ICOs in North America. UK has seen the highest number of ICOs in Europe with a total of 93.
Financial services, Technology, and Gaming remain the most popular investment industries.
Are ICOs Really Doomed?
It is true that trade has slowed down, but does this mean that the market is doomed?
An indexed ROI graph of all ICOs indicates that 300+ ICOs ended Q2 with a positive delta over the period May to Jun, 2018.
Even though the ICO market appears to have been in a downtrend, an individual could have made a 5X-10X profit had he bought into the right ICOs. At $6.3 Billion, ICO funding in the first quarter exceeded the 2017 total, a figure that could undermine a widespread impression that this oft-spoken fundraising method will soon die out.
On the contrary, Cryptos grew in 2018. Only trade and crowdfunding appeared low in some cases, however, VC investments increased significantly.
Also, mergers and acquisitions are becoming very common in the world of ICOs and blockchain startups.
The reason why most ‘Research Reports’ claim that the market is withering and not maturing is that none of their statistics represent neither private investments nor merger/acquisition activity.
Private investments are difficult to measure since they are carried out with a certain degree of confidentiality. Extensive measures need to be taken to capture this information. InWara does this by analyzing 3000+ ICO whitepapers, almost 2200 official company blog articles, 500 official press releases and continuous web monitoring of news and social media sources.
Q. How would you define the current trend in the emerging markets involving cryptocurrency?
“The future seems optimistic despite the slow down in 2018. All it really takes is a step back from the charts and an education on the underlying fundamentals to realize that digital assets have been beaten without cause.”
Q. There seems to be a visible shift from public fundings to private/VC fundings. Why do you think this is happening?
“The “average Joe” has become wary of ICOs ever since the crypto market correction in Q1 2018, however, VC funds and private investors have been pumping capital into this space non-stop. This is likely a result of the growing confidence of big players entering the market and understanding the power law dynamic behind Crypto’s notoriously high volatility.”
Q. Which industry looks the most promising when it comes to disruption by blockchain technology?
“When we compare the many cases of use that come from blockchain — based startups, we can see that the Financial services industry remains the main focus of emerging innovation and invested capital. This reflects the importance of the “early-mover” advantage — a competition factor of who sets the bar first.”
The Future of Crypto
2018 has introduced crypto to the world. There have been more coins, more ICOs, more money, and more industries involved in Blockchain than ever before.
The InWara Research Team ensures quality and accurate research, analyzed exhaustively by a team of quality controllers and highly skilled analysts. The research team strives to publish only the most accurate information possible, so all information has been carefully considered on a factual basis and the data is collected by analyzing 3000+ ICO whitepapers, almost 2200 official company blog articles, 500 official press releases and continuous web monitoring of news and social media sources.
“Our customers use our data analytics engine to find data and unique insight to help them when they buy and sell crypto throughout the markets. We used our data analytics tool for this report to analyze the ROI of each ICO listed after. It takes 10 seconds to filter data by industry or country.
Visit InWara’s website to view complete Q3 report of 2018.
From Shipwreck To New Life: Venture Capitalists Save The Day For Blockchain Companies & ICOs was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.