Autonomous Research, a financial research firm, published a report on October 8th in which it noted that initial coin offering (ICO) funding in September of 2018 totaled $300 million - which “suggests that monthly ICO activity is down 90%” as the popular crowdfunding method raised about $3 billion in January 2018.
According to data from Autonomous Research (AR), ICOs raised $400 million in August 2018 - which is still substantial considering “the idea of buying a utility token (does nothing yet, legally non-binding)” does not seem too promising. Instead, AR thinks investors may be more interested in “buying equity in the same companies.”
Other financial data from Pitchbook (shared by AR) shows that blockchain and crypto-related venture capital investments were of about $1 billion in August 2018. Recent growth and business-related decisions taken by fintech firms such as Robinhood and Revolut and crypto mining hardware manufacturer, Bitmain Technologies, might account for the “increasing drips of capital”, AR wrote.
Security Token Offerings (STOs)
The current state of funding in the digital asset industry, as described by AR, is that “recent months have seen a decline in public crowdfunding, but an increase in private checks.” It’s possible that blockchain projects are “selling equity and giving matching tokens for ‘free’ to investors in the capital structure”, AR noted.
The financial research firm’s report concluded by acknowledging that security token offerings (STOs), which are financial instruments (similar to traditional securities) whose ownership can be verified through a blockchain network, will also play a significant factor in the emerging digital asset investment market. However, “STOs won't hit the market in earnest for another half-year at least due to regulatory indigestion”, AR added.
Notably, the investment research firm thinks there may be a link between China’s lending markets and the crypto space as it wrote that “the collapse/crisis in Chinese P2P lending since 2015 [could have led to] risk-seeking capital [ending] up in ICOs.”
Crypto Market "Competitive" Or "Struggling"?
Meltem Demirors, the chief strategy officer at CoinShares, a crypto treasury management solution provider, said in August that the crypto ecosystem is “really struggling” with capital. However, it appears that there are huge discrepancies in cryptocurrency-related financial data being reported.
On September 28th, Elementus, a blockchain analytics firm, published a press release in which it mentioned that ICOs raised $1.5 billion in August of 2018. Also, the “percentage of ICOs that successfully raised at least $100K fell to 22%” - which is a “lower success rate than any prior month, implying an increasingly competitive field.”
Elementus CEO, Max Galka, believes:
Disparities in blockchain transaction figures have made it virtually impossible to determine what's going on. The reason for these misleading stats is the inaccessibility of blockchain data, which is stored in a convoluted, non-readable format that serves functional purposes by being optimized for efficient computation but not human use.