ICO Market Report 2019/2020 – Performance Analysis of 2019's Initial Coin Offerings

35 Pages Posted: 18 Feb 2021

See all articles by Lars Haffke

Lars Haffke

Technische Universität München (TUM) - TUM School of Management

Mathias Fromberger

Technische Universität München (TUM) - TUM School of Management

Date Written: December 30, 2020

Abstract

Initial Coin Offerings (ICOs) are still one of the most fashionable topics in the area of financial markets. For token issuers, they are a continuing to be a success story. In 2019 alone, more than $ 3,3 billion USD have been raised in ICOs. From the investors’ perspective, however, things do not look so shiny. Lots of them claim to have lost significant amounts of money invested in tokens issued by more or less reputable companies.

In this market report, we analyze the ICOs of 2019. We illustrate the ICO market of that year and scrutinize how prices of the issued tokens have developed until mid 2020. Thereby, we take the perspective of an investor that bought tokens initially from the issuer.

We found that investors, which invested in ICOs during 2019, had roughly a 17% chance that their tokens traded above their ICO issue price after six months (up from 8% in 2018). By July 2020, this number drops to 12%. Almost nine in ten tokens trade below their ICO price. More than 65% of tokens have lost substantially all their value. This could indicate that the market gets rid of the those ICOs which are initiated by companies without a proper product or without a serious intention to develop a sustainable business.

This might help the ICO market as a whole to become mature. We further investigate how the ICO classes of 2017 and 2018 (which have been studied in previous reports) developed until mid 2020. Results show that the overall performance of tokens has become slightly worse. 2019's ICOs, on the other hand, are performing significantly better than 2018's ICOs again - a sign that the market has become more and more mature after the ICO hype in early 2018.

Additionally, we compare tokens' performances against their counterpart in the traditional world of capital markets - IPOs. We find that shares issued in IPOs are performing significantly better on secondary markets than tokens issued in ICOs.

Keywords: Initial Coin Offering, ICO, Token, Blockchain, Cryptocurrency, Venture Capital, Crowdfunding, Ethereum, Coin, Initial Security Offering, Security Token, STO, Utility Token, 2019, 2020

JEL Classification: G11, E22, M13, O16, G30, G31, K00, K22

Suggested Citation

Haffke, Lars and Fromberger, Mathias, ICO Market Report 2019/2020 – Performance Analysis of 2019's Initial Coin Offerings (December 30, 2020). Available at SSRN: https://ssrn.com/abstract=3770793 or http://dx.doi.org/10.2139/ssrn.3770793

Lars Haffke (Contact Author)

Technische Universität München (TUM) - TUM School of Management ( email )

Arcisstr. 21
Munich, Bavaria 8033
Germany
+498928925348 (Phone)

HOME PAGE: http://www.law.wi.tum.de

Mathias Fromberger

Technische Universität München (TUM) - TUM School of Management ( email )

München
Germany

HOME PAGE: http://www.law.wi.tum.de

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