In part 6 of Crypto Review, we wish to draw your attention to the possibility of an overheating ICO market. As it is, the market is seeing somewhere close to 400 ICOs taking place (so far) this year alone. Hundreds more are in the pipeline. An average ICO project easily raises millions – which is why is has been a popular method (this and last year) in which startups raise money.

However, in the recent months, a few studies are now coming out to report that – many ICO companies fizzle out within a period of 1 to 1.5 years. While experienced crypto investors acknowledge the presence of “shitcoins”, they still buy-in during ICOs anyway – as the thought of an easy 10X gain is too hard to pass on. So, the question is, when will the music stop playing?

Crypto market are still largely tied to Bitcoin’s performance

Bitcoin’s prices have large consolidated around US$7,500 for the past month or so. As such, the market capitalisation of the crypto market had hardly moved, as prices of most coins only gain when bitcoin moves upwards.

Whether or not a decoupling from bitcoin’s price movement will happen for the crypto market – remains to be seen. As of now, bitcoin is still contributes at least ⅓ of the market capitalisation and trading volume at any given time.

Based on calls by many “experienced” players in the market – it seems that Bitcoin still has room left for a huge price run-up. Therefore, to call “Peak ICO” now would be pre-mature. But, Momentum Works does think that it is peak shitcoins right now. Reason simply; all the weak investors have been shaken out of the market. New, inexperienced investors are too afraid to invest currently – but the big boys are definitely buying up excess coins right now, for cheaps.

ICOs – the new favourite investment of the monied

One thing that cannot be ignored – the increased involvement of private investors. Take the Telegram ICO for example. It raised privately, a sum close to US$2 billion. Private rounds are definitely an idiot-proof investment, on paper anyway.

Telegram didn’t even need to do a public ICO offering; and… HNIs (High Networth Individuals) are just beginning to get the hang of it!

Chip in, say US$100,000 as a private investor, and get coins for maybe 30% off listing price. When the coins are listed on exchanges, dump for profit. One can make even more if he/she got involved in the ICO project from the ground up. Some estimates, at least 10X the original capital. So, this new brand of musical chairs is definitely heating up – but no signs of the music ending yet. If anything, it just began.

Raising from private investors have gotten so popular that many projects skip ICOs, going straight to airdrop – an event where users who sign up get free tokens for doing NOTHING. The idea is to get the coins out there, with the hopes that it will be spent or traded.

Outlook in the next few months?

We are not investment advisors – but we see huge potential upside for coins/tokens with solid development teams, which focus on use cases.

Bitcoin Cash (BCH) is reportedly gaining huge grounds (against Bitcoin), in driving adoption. Lower transaction fees, and speedier transactions were the key drivers for business adoption.

Alternative coins with massive use-cases such as Litecoin, Bitcoin Cash, Ethereum, could see huge upsides as Bitcoin becomes the gold standard, and thus its use-case stagnate. For now anyway, we’re still keeping our US$100,000 per Bitcoin prediction.

If you want to read the rest of our Crypto Review series, click here

 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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He has worn many hats in the past - selling advertising space, banking services, and even trading stocks. In 2013, longing for a change of scenery, he joined Rocket Internet’s (now Alibaba’s) Lazada as a online marketer in Bangkok, where he experienced first hand life in a startup. He never looked back since - landing lead roles at Rocket’s EasyTaxi (Singapore), Rocket’s MEIG (Dubai), and Bamilo (Tehran). After that, he launched (and ran) the Thai venture for one of Singapore’s biggest cross-border ecommerce. Last year, Chong put his expertise to work, helping an SGX-listed company relocate to and run operations in Thailand. Nowadays, he’s just chilling by the countryside.