Back when Ether, along with other cryptocurrencies, began its steady decline, some experts were concerned that, because most ICOs accept donations exclusively in Ether, that this would trigger panic selling among Ether-funded blockchain-based startups.
This could have been disastrous for the wider blockchain community and may have even put an end to the so-called ‘ICO boom’ of recent times.
However, research published today by BitMEX, shows that this has not been the case and that, in fact, most projects that sold tokens based on Ethereum’s ECR20 protocol and, as such, accepted donations in Ether, have retained their value and not been overly effected by Ether’s bearishness.
Indeed, according to the below abstract, even at Ether’s current price of $230, ‘projects are still sitting on unrealised gains, rather than losses’.
“Following on from our first piece on ICOs in September 2017, which focused on the team members and advisors, in this report we work with TokenAnalyst to track the Ethereum balances of the ICO projects over time.
We look at the amount of Ethereum raised and the US$ value of the gains and losses caused by changes in the Ethereum price, for each project.
We conclude that rather than suffering because of the recent fall in the value of Ethereum, at the macro level, the projects appear to have already sold almost as much Ethereum as they raised (in US$ terms).
Of the Ethereum still held by the projects, even at the current c$230 price, projects are still sitting on unrealised gains, rather than losses.”
“ICOs have already sold almost as much US$ worth of ETH as they initially raised”
1/ BitMEX Research publishes a new report analysing the Ethereum holdings of the ICO projects. We establish that the ICOs have already sold almost as much US$ worth of Ethereum as they initially raised.
— BitMEX Research (@BitMEXResearch) 1 October 2018
The BitMEX Research report also paints a picture in which startups as a group are financially-secure enough to weather a prolonged bear market.
“Despite the 85% reduction in the Ethereum price from its peak, the projects have realised gains of US$727 million due to profits from Ethereum have they already sold, often selling before the recent price crash. The 3.8m Ethereum still on the balance sheets of these projects may not have that much of an impact on the Ethereum price, as its represents a reasonably small proportion of the 102 million supply of Ethereum.”
The report concluded by speculating that, 'on a macro level, the projects may be feeling reasonably confident rather than needing to panic sell'.