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Half of ICOs Die Within Four Months After Token Sales Finalized (bloomberg.com)
An anonymous reader quotes a report from Bloomberg: About 56 percent of crypto startups that raise money through token sales die within four months of their initial coin offerings. That's the finding of a Boston College study that analyzed the intensity of tweets from the startups' Twitter accounts to infer signs of life. The researchers determined that only 44.2 percent of startups survive after 120 days from the end of their ICOs. The researchers, Hugo Benedetti and Leonard Kostovetsky, examined 2,390 ICOs that were completed before May.
Acquiring coins in an ICO and selling them on the first day is the safest investment strategy, Kostovetsky said in a phone interview. But many individual investors can't participate in ICOs, so this option isn't open to them. Still, all investors should probably sell their coins within the first six months, the study found. "What we find is that once you go beyond three months, at most six months, they don't outperform other cryptocurrencies," Kostovetsky said. "The strongest return is actually in the first month." The Boston College study also found that ICO returns are declining, as startups have becoming savvier about pricing coin offerings and more people have jumped into ICO investing. According to Bloomberg, "Returns of people who sold tokens on the first day they were listed on an exchange have been declining by four percentage points a month, Kostovetsky said."
Acquiring coins in an ICO and selling them on the first day is the safest investment strategy, Kostovetsky said in a phone interview. But many individual investors can't participate in ICOs, so this option isn't open to them. Still, all investors should probably sell their coins within the first six months, the study found. "What we find is that once you go beyond three months, at most six months, they don't outperform other cryptocurrencies," Kostovetsky said. "The strongest return is actually in the first month." The Boston College study also found that ICO returns are declining, as startups have becoming savvier about pricing coin offerings and more people have jumped into ICO investing. According to Bloomberg, "Returns of people who sold tokens on the first day they were listed on an exchange have been declining by four percentage points a month, Kostovetsky said."
Who really buys this shit? It's like you just open your wallet and say "take it all please."
It seems like whenever there's an economic expansion of any kind, people are desperate to put their money in anything regardless of the chance of success. This particular time will be very interesting to look back on, because you basically have multiple different bubbles all going on at the same time and they all feed on each other. I feel old, but I really don't see cryptocurrency as anything more than a scam.
The mobile/app economy bubble is fed by the cloud bubble, which both feed the blockchain/cryptocurrency bubble, and all of them are sustained by The Cloud. Back in the 90s, if you wanted to sell bags of dogfood online and ship them for free to get eyeballs, getting started cost tons of money. You had to buy servers, colocate them in a data center, etc. and it cost millions to start up. Now, all you have to do is use the founder's credit card to buy AWS/Azure/GCP time and the money comes out much more slowly. This is why I think the bubble(s) are going to last a lot longer than the last one...there's way less pressure to IPO and topple the house of cards. Most of unicorn startups are being happily fed money by VCs rather than Grandma's pension fund buying into pets.com, and they need less every month.
My worry is that allowing these bubbles to live longer than they should will make them huge and cause an even bigger mess when everything comes crashing in. Look at Silicon Valley housing markets as an example. I live near NYC, so I'm not one to point fingers at crazy housing prices. But if i wanted to move there for a job, a similar house to mine, a similar distance to work would be 4 or 5 times the price of my already-expensive one here in suburban NY. Yet, people are happily buying/renting so they can cash in on the gold rush...no thanks.
"About 56 percent of crypto startups that raise money through token sales die within four months of their initial coin offerings."
Yeah, and 80 - 90% of start-ups die within the first 12 months, which leaves the obvious question; Are ICOs nothing more than scams, or is a four-month death essentially expected in this particular type of business?
Perhaps it's a bit early to really tell, but it's rather ironic that ICOs seem to have a success rate on par with damn near any other type of start-up (if not better), and yet we're questioning that activity worse than Al Capones tax auditor. All forms of investing are gambling at the end of the day.
No, investing isn't gambling, it's not black and white like that.
There's more of a scale. At one end you have "gambling" and at the other you have "investing". At the far gambling end of the spectrum you have games of chance (e.g. roulette), binary options (which is gambling dressed up to look like investing), slot machines etc - basically all the types of things where the house always win. At the other end you have things like bonds, traditional long term buy and hold in blue chip companies etc. There's still some risk but on that end of the spectrum, it's not a zero sum game nor "the house always wins".
If you say all investing is gambling because there's some risk and can never be a sure thing, then you get to the reductio ad absurdum argument that absolutely everything is gambling, e.g keeping your money in a savings account is also gambling because that's not a sure thing either.
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