Majority of ICOs Closed Shortly After Token Sales
July 11, 2018
Boston College researchers conducted a study on how cryptocurrency projects live after their token sales end. A total of 2,390 ICOs ended before May this year was researched and it was found out, that only 44.2% of the projects remain active 120 days after they raise funds.
One of the researchers Leonard Kostovetsky told Bloomberg:
"What we find is that once you go beyond three months, at most six months, they don’t outperform other cryptocurrencies. The strongest return is actually in the first month."
He noted, that the best investment strategy is acquiring ICO tokens on the first day of a token sale and then immediately selling them. However, many retail investors cannot participate in a token sale at an early stage. Therefore, they should sell their tokens within the first six months.
"People often look at returns and say this is a great deal, but we teach in finance that return is a compensation for risk. These are stakes in platforms that have not yet been built, that have no participants yet. There’s a lot of risk. The majority of ICOs do fail."
It is worthy to note, that last month a website called Coinopsy conducted a study on how risky ICO investments are. The study found, that almost 80% of cryptocurrency startups are fraudulent, and 10% closed before they raised enough funds.