The cryptocurrency market experienced another correction last week, with the overall market declined 23% to $357 billion. Bitcoin dropped 23% to $8,570 while ether declined 20% to $670.
We believe the decline was due to a few bad news concerning the fundamentals of cryptocurrency – the Japanese government fining a few cryptocurrency exchanges, SEC asking exchanges to register, and fear from the compromise of a third party tool of Binance (turns out people got scammed by phishing sites).
We want to talk a little bit about the state of ICOs here. Recently, most ICOs dropped below ICO price, sometimes right after the tokens are tradable. The level of decline is even more severe than the last winter we experienced during October/November 2017.
There are two reasons for the performance – the overall bear market in cryptocurrency, and major exchanges becoming more reluctant to list new tokens.
As a result, ICO participants are not able to convert the tokens back to ether quickly. This creates a vicious cycle that slows down the ICO market: projects are having a more difficult time raising funds because some ICO participants are stuck with their tokens from previous ICOs.
Therefore, we expect it will be much more difficult for projects to reach their funding goals in the near future. The table has turned completely from just two months ago – ICO participants can now be selective about which project to back without worrying it finishing the crowdsale quickly.
* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.