Initial coin offerings (ICOs) pushed Bitcoin (BTC) to nearly $20,000 in 2017, even though many projects that emerged proved to be unsustainable or simply scams. However, those who survived delivered fat returns to those who held the assets the longest.
Just as companies do IPOs, or Initial Public Offeringsto sell shares and open their capital to investors, ICOs put up new crypto assets for sale with the aim of raising funds for a blockchain-based project – be it to create a new currency itself, or to offer some other related product or service. to this universe.
ICO performance resurfaces today, amid a new sell-off extended use of cryptocurrencies.
In 2017, at the height of the boom of ICOs, the United States Securities and Exchange Commission (SEC) has made a series of accusations claiming that many projects were carrying out unregistered securities offerings, some of them involving outright fraud.
In 2018, consultancy EY, which tracked several projects that emerged in this bid bubble, reported that its ICO portfolio had dropped 66%. According to a company spokesperson, only 29% of evaluated 2017 ICO projects progressed to prototypes or working products – an increase of just 13% from December 2017. The remaining 71%, on the other hand, had not launched. nothing on the market until 2018.
• ICO: An Essential Guide to Virtual Asset Initial Offerings
Even so, it was a period when some of the most important blockchain infrastructures were developed. This is the case with Cardano (ADA), Tron (TRX), Chainlink (LINK), Filecoin (FIL), Crypto.com (CRO) and Bancor (BNT), which emerged in the ICO bubble and came to build large projects.
Return of 819%
Based on data from the ICODrops platform, CoinDesk has brought together two portfolios of ICOs: a selection of “blue chips” from the 100 most renowned names and a broader group of 200 initial coin offerings.
The study revealed that if the investor had bought and held a wide selection of blue chip ICOs in 2017, it would have performed very well, returning 819%, based on data as of late May 2022.
The result would have outperformed most other investments in the same period, including the purchase in late 2016 of Nvidia (NVDA), one of the best-returning stocks of the last decade, or the S&P 500 and Nasdaq-100 Technology indices. Sector Index (NDXT), which tracks the performance of the US technology sector.
According to analysts interviewed by CoinDesk, the projects required time to thrive. In other words, at best, portfolio returns would be lukewarm during the “crypto winter” of 2018, but would explode later, when investor excitement returned to inflate prices.
At the time of ICOs, digital currencies represented a universe of $150 billion in market cap, far less than the $940 billion today after Bitcoin’s price plummeted 70%.
The expansion shows that, even with the challenges presented in the last quarter for the asset class, many of these projects that were born in the ICO bubble are now the main players in the sector, showing the resilience of the strategy of buying crypto assets and holding them for the longest time. possible time.
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