Of the 169 ICOs that took place in October, only 69 managed to reach their fundraising goals.
In September of this year, Ethereum founder Vitalik Buterin said that he “indeed [thinks] that we are in a bubble because all the cryptocurrencies are rising and people have a feeling that they will always continue to rise.” However, “In the end the market will need to cool down. A lot of projects will fail and people will lose money.”
That cooling appears to be taking place right now. Cryptofinancial research firm Smith + Crown reported that the amount of ICOs planned to close over the last four months has been increasing – there were 31 in July, 45 in August, 59 in September, and a whopping 169 in October – that’s more than five new ICOs every day for that month.
However, only 69 of those 169 October sales actually managed to reach their fundraising goals before their closing dates. According to Smith + Crown, the rest of them ended up “either extending, postponing, or cancelling outright their own proposed sales.”
Buterin pointed out that “if most ICOs fail, that is a risk (to Ethereum itself)”. A series of weak (or perhaps even fraudulent) ICOs could cause the world to take a step back from the practice. However, the current cooling off of the market may be a good thing in the long run – an important step towards reaching an ICO climate in which only the best-built coins are likely to succeed.
Indeed, Smith + Crown has said that the results of the recent saturation in the ICO market point toward several conclusions. The first is that “the average project proposing an ICO is simply not raising $10 million with nothing but a whitepaper and a website.” Additionally, the presence of a lot of strong projects seeking to raise between $10 million and $30 million has simply saturated the market.
Smith + Crown also says that the weakening of ICOs can be interpreted as the rise of a more discerning, rational market that is more selective about the projects that it chooses to fund.