It is just the beginning of the coin offering market. In this article we, Block X Bank, an investment bank focused on blockchain, will explore using the best data available the past, present and future of the Initial Coin Offering (ICO) market. Total potential market size Private Equity Assets under management are valued in total to about […]
It is just the beginning of the coin offering market. In this article we, Block X Bank, an investment bank focused on blockchain, will explore using the best data available the past, present and future of the Initial Coin Offering (ICO) market.
Total potential market size
Private Equity Assets under management are valued in total to about $2.5 trillion USD. A Private Equity investor is typically locked in for 7 to 10 years. In general, the investment is difficult to value during that time. And the investor receives back their payment at the time that is solely at the discretion of the fund manager.
Imagine a world where most crypto-coins are regulated securities trading on regulated securities exchanges. And these coins are backed by shares in companies, cash flows, dividends, interests, notes, and other existing proven financial products.
Crypto-coins and initial coin offerings have in fact even more advantages: Initial coin offerings enable companies to not only raise money but to also get a set of initial customers and to build a community. This community will then also act as marketing agents and soft influencers to help promote the company and product as they have a vested interest in them being successful.
Per data from ICO Raises (www.icoraises.com) ICOs have raised approximatively about $3.494 billion until Dec 15 2017.
The general rule of thumb is that the average crypto holder will likely diversify into riskier and potentially higher return tokens about 5% to 10% of their portfolio.
As of December 19th 2017 according to coinmarketcap.com the total value of the tokens held by crypto market participants (in other words the market cap) is roughly $600 billion USD.
Therefore, we expect that about $30bil to $60bil in value is available for Initial Coin Offerings and other high-risk high-reward investments in the crypto space.
Some of these $30bil will probably be used for day trading and highly speculative pump-and-dumps or similar “business ventures”. We assume that a significant percentage , perhaps 20% of it at least, will still be used for Initial Coin Offerings.
Therefore, Block X Bank estimates that about there is additional demand for $3 to $5bil in ICOs as of December 2017.
From business-plans only to revenue-generating companies
The Initial Coin Offering market started with funding very early stage companies who only have a business plan. We have already noted that in the second half of 2017 the ICO market is now trending more towards companies with existing revenue, customers and working products. Early stage companies are still successful but only if they have a famous investor who puts their seal of approval by investing in the project first.
Basic economic cycle
Despite this move towards more established companies the Initial Coin Offering market also goes through the standard economic cycles.
The well know cycle of human emotions as applied to market cycles: