Crypto ICOs that use the Ethereum Blockchain was perceived as a major catalyst for Ether’s price surge last year. However, some pundits are holding the ICO’s responsible these days for the coin’s decline.
Monday, September 24, 2018, saw the digital currency of the Blockchain network, Ether going down by 17 percent. It was the biggest decline for the cryptocurrency since March this year.
The price of the Ether coin went down to stop at just 285 USD. It was the first time Ether went below the 300 USD mark since November last year. The digital currency has gone down by approximately 60 percent in 2018 as compared to the 54 percent slide of Bitcoin.
In February this year, the value of Ethereum went over 1,000 USD as the startup businesses developed projects using the distributed ledger technology as well as sold crypto coins for its ICO initiatives. Investors who purchased Ether coins to take part in such Initial Coin Offerings acted as a catalyst to push the price up.
However, some of those same projects are seen cashing out in order to cover up their expenses and also because of the apprehension that the cryptocurrency bear market will continue even this year. The sentiment was also echoed by Biswa Das, a person who runs a crypto hedge fund called BloomWater Capital, Bloomberg reported.
Review of Initial Coin Offerings
They are a great technique to raise finance. Equity shares are not given away and as such the equity investors and founders retain the business’ future value. Contrary to debts, businesses do not need to pay any money from the funds raised via their ICOs. As such the company’s capital cost is tremendously low.
On the flip side, the costs associated with the launch of a crypto ICO can be quite high due to their growing popularity. However, ICOs do have great potential to benefit both the investors as well as the companies launching them, according to Forbes.
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