Majority of ICOs Live Less Than 120 Days
New academic research has concluded that more than 50 percent of crypto projects raising capital through ICOs do not make it through to the fifth month after the token sale. The study also suggests that investors get the best return on their money if they sell the coins within the first month of trading, while the safest strategy would be to part with the tokens on the very first day.
Despite data from two recent studies suggesting that investors are still bullish on ICOs (Initial Coin Offerings), a research conducted by Boston College academics reveals that most crypto startups relying on crowdfunding have a pretty short lifespan. According to the authors – Hugo Benedetti, assistant professor at the Carroll School of Management and finance PhD student Leonard Kostovetsky – less than half of all new ICOs survive more than four months after launch.
The two researchers based their study on analysis of the Twitter accounts maintained by the projects, taking into account the intensity of tweets after the coin offering. They estimated that the survival rate of the startups, 120 days after the end of the sale, was only 44.2%. The assumption is that companies that are inactive on social media in the fifth month most probably did not survive. The report covers almost 2,400 ICOs completed before May this year, and examines over 1,000 Twitter accounts.
The survival rate has been calculated as an average figure for three categories of ICOs, Business Insider reports. The first group consists of projects that have not reported raising any money and are not listed on exchanges. Startups that reported raising capital but didn’t list fell in the second category. And the third includes the ICOs that list their coins on trading platforms. The statistics show the following survival rates – 17%, 48%, and 83% for these groups, respectively. The share of the projects that become inactive right after their token sales, or the potential scams, is about 11%.