“Vaporware” ICO Tokens are Already Trading Below Their Initial Offering Price

“Vaporware” ICO Tokens are Already Trading Below Their Initial Offering Price

The initial coin offering (ICO) industry finds itself in a bit of a pickle. On the one hand, the SEC is cracking down on illicit securities offerings. On the other hand, the prices of ICO tokens are crashing hard. This is not a great development for the industry as a whole.

The ICO Tokens Are Crashing in Value

Buying into an initial coin offering is always a certain risk. The perceived value of these tokens may not necessarily reflect their actual value. As of right now, close to half of all ICO tokens are trading at a lower price. More specifically, they are valued below the initial offering price. This doesn’t please investors in the slightest, yet it is not exactly a surprising trend.

A lot of these tokens are priced at a value which is pulled out of thin air. For example, ICO tokens can be worth $1, because the company wants to sell X amount of tokens at that price to raise Y amount of money. That doesn’t mean said token is actually worth $1 now, or in the future. It is the price investors will pay to get their hands on new ICO tokens accordingly. Some more thought needs to put into how these tokens are valued.

With around half of all ICO tokens trading below ICO price, a very worrisome situation ensues. Reclaiming the lost value will not be easy whatsoever. All markets have turned ultra bearish right now. Stopping this gushing wound from bleeding will be very difficult. As such, most of these ICO tokens will continue to lose value as investors are cutting their losses.

The Growing List of Empty Promises

Even without a bearish cryptocurrrency market, most ICO tokens wouldn’t be in a good place right now. With so many projects “promising” great things, it’s only normal investors lose patience. The vast majority of initial coin offerings have no working code or a product. While MVPs are usually unveiled within six months, people active contribute money to projects which can be labeled as “vaporware“.

All of this makes one wonder how ICO tokens need to be valued from day one. Projects with no working code or product have, on paper, a value of $0. As such, their tokens should be valued at $0 as well. Unfortunately, that is not how ICOs work these days, and ICO tokens will receive an arbitrary value at all times. This situation is unsustainable in the long run, though.

For now, we will have to wait and see what the future holds for all of these tokens. Right now, things are not looking great. Even projects with a working product or code are suffering from the massive cryptocurrency onslaught. Turning this ship around will not happen anytime soon either. Everyone is looking for quick profits or ways to cut losses. The long-term perspective is not a priority for most ICO investors and speculators by any means.

18.03.2018 / 07:05 107
Luxembourgs Financial Regulator Issues Warning Against Cryptocurrencies and ICOs Luxembourgs Financial Regulator Issues
Luxembourgs Financial Regulator CSSF has issued a warning about the risks of investing in cryptocurrencies and ICOs. The Luxembourg Financial
Praetorian Group Files To Be First ICO To Sell Registered Security Tokens In US Praetorian Group Files To Be First ICO
The Praetorian Group has filed a $75 mln ICO with the SEC, potentially offering the first ever registered security tokens in the US. The Praetorian
SEC Chairman Fires Another Warning Shot at ICOs as Agency Issues ‘Dozens’ of Subpoenas SEC Chairman Fires Another Warning Shot
The top regulator at the US Securities and Exchange Commission (SEC) has fired yet another warning shot at initial coin offerings (ICOs) that are
SEC Chair Says 'We Are Watching' As Companies Launch ICOs SEC Chair Says 'We Are Watching' As
Jay Clayton, the chairman of the U.S. Securities and Exchange Commission, has issued new remarks about the regulatory risks of launching an initial
Son Of Wu-Tang Clans ODB To Launch Own Coin Via ICO To Support Music, Brand Son Of Wu-Tang Clans ODB To Launch Own
The son of a late member of the Wu-Tang Clan will issue his own ICO, Dirty Coin, to support music projects and other ventures. Hip Hop artist Young
Overstock Sees Share Price Drop After Subsidiary Becomes Target Of SEC Probe Overstock Sees Share Price Drop After
Overstock has experienced a 10% share price drop after its subsidiary, tZERO, announced that they are a target of the SEC crypto probe.
Comments (0)
Add a comment
Comment on