After 3.23 Billion in funding during 2017 Q4, how much of the crash was due to ICO's exchanging their funding for FIAT?
The recently released Coindesk - State of Blockchain Q4 has released a huge amount of fantastic information. Something that did catch my attention though was ICO funding.
During Q4, there was 3.23 Billion in ICO funding, that is an absolutely phenomenal amount of money being invested in ventures that were mostly just white papers.
Obviously the market was well overbought coming into early January, and profit taking by early adopters, and the subsequent fear of a crash lead to an absolutely astounding correction.
I am interested though in how much of this crash was induced by a sell off of ICO's intending to fund their projects? The world still runs on FIAT and new projects aren't paying there bills in ETH and BTC.
On the contrary though, the rise in the price of ETH actually accounts for a large amount of the perceived funded value.
When priced in ETH
Q2 - 4.96m
Q3 - 4.83m
Q4 - 7.52m
That's 17.31 million ETH tokens funded to ICO's during the past three quarters. That accounts for nearly 20% of the entire ETH supply. selling that off in early January, as well as profit taking by early adopters across the entire cryptospace, easily explains the huge crash in marketcap. FUD may have made it worse, but it was more likely a byproduct of natural market movements, and people taking advantage of sentiment.
Posted Feb 8, 2018, 6:30 AM UTC
How much of our sense of value in ETH came from the mechanism it creates to raise capital?
At the moment, the ERC20 token and others are the most widely utilized use-case of ETH. You can't have the value gains of ETH without it's use-cases. Your question implies that these tokens are value drains on ETH. It's much more fair a presentation to include that these are the best examples we have to substantiate that ETH is not just another bitcoin - thats why it's risen by 10,000 percent and why people predict it's continued march to the head of the pack.
I think it's a give and take situation. These tokens give ETH value, through ICO's and the platform as a whole. However, they will also be a cause of volatility in the price of ETH. I think it is just another metric in which should be tracked to deduce price movements in ETH. It's not negitive or positive that these ICO's need funding and will trade ETH for FIAT, it is just the nature of the market and as a trader or hodler, one needs to be aware of what causes price movements in their chosen asset.