Is the crypto market slowing down?
Hundreds of new blockchain companies were created every month during the last quarter of 2017. These companies, traded in the crypto asset market , grew the market to $800B capitalization. However, this market is still at an early stage of development and it is likely to continue to grow in a volatile manner.
The crypto market appears to be in a bubble today
The market is being distorted by the speculative value of the different coins. The capital market had a similar event in early 2000 during the Internet tech bubble where hundreds of companies were created and later disappeared.
Blockchain is building protocols and application software similar to the 1993-2000 period where hundreds of dot-com companies were created. Most of these companies failed and were recasted years later as successful ventures which opened the door to the creation of the FANGs (Facebook, Amazon, Netflix, Google) of today.
The crypto market is taking a rest after reaching a high on early January. It is currently on a $500 B to $600B capitalization range.
The ICO market is maturing
Over 165 token sales were schedule to close in October 2017 but only 40% were completed on time, reported Smith+Crown. The rest were delayed, extended, or canceled.
While the number of ICOs per month has increased, with 68 ending in October. Total amounts raised declined to $662M from a September high $941M.
Source: Smith and Crown, (https://www.smithandcrown.com/october-token-sales-market-maturing-business-getting-done )
The ICO process is more costly today as investors become more selective. Marketing and PR costs are higher to help differentiate the new ICO from existing blockchain or digital ledger companies. Lawyers, consultants and service providers fees, to name a few, add up to improve the quality of the offering. To launch an Initial Coin Offering on average it costs as much as $1 million.
Public crowdfunding have served the blockchain industry well. However, there are limitations that need to be overcome. The speculative value of the coins and or tokens are driving pricing up and the regulatory environment is becoming more difficult.
Value will prevail and the market will change for the best
Utility value is what it count to become a successful blockchain company. This should be the ultimate driving force of a blockchain enterprise.
Governance principles will evolve to make the ICO process more transparent and safer for investors. Fund raising and incentives for founders and developers will change to be more closely associated with the development stages.
The markets will also become more regulated to offer equal access to worldwide investors. For instance, USA investors are not allowed to participate in some foreign markets.
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