2018-9-11 18:55 |
Research Shows Most ICO Companies Still Hold Significant Amount of ETH
A new study published earlier today shows that ICO companies continue to hold large amounts of Ether (ETH) that they raised during ICOs.
The study suggests that, on average, companies have 40% of their total supply of raised ETH remaining. That could mean continued downward pressure on the price of ETH moving forward as ICO companies continue to sell ETH to cover operating expenses while waiting to achieve profitability.
That study was published in today’s issue of Diar. You can view the study here. Larry Cermak (@lawmaster), who co-authored the study, also highlighted some of the most important points of the study in a Twitter thread.
The study revealed that ICO companies have sold some of their ETH, but nowhere close to all of it. Some members of the public seem to believe that ICO companies liquidated their entire ETH holdings at the height of the market – back when ETH was above $1,000. As this study shows, that is not the case, and many companies continue to hold a significant amount of ETH even as the world’s second largest digital currency falls below $200.
1/ There is a big misconception that ICO companies have liquidated most of their ETH holdings. In today’s issue of Diar, we looked at all the publicly available ICO treasuries and analyzed the numbers. https://t.co/EryLsW9Ouj pic.twitter.com/j2DYajcwzQ
— Larry Cermak (@lawmaster) September 10, 2018
Some of the key points from the study include:
The sum of ETH holdings of all (publicly available) ICO treasuries is 3,744,651 ETH, or approximately 3.7% of the total supply of Ether In April, the same treasuries held 4,651,675 ETH, or 4.5% of the total supply These numbers suggest that the companies moved or liquidated approximately 20% of their ETH supply between April and September 2018 Pokedot, Iconomi, and Musiconomi have a total of 480,114 ETH, or $92 million worth of ETH, stuck in the Parity bug; they cannot move or liquidate this ETH At least 12 ICO companies have a smaller market cap (with their native tokens) than they hold in their ETH treasuries alone; the 12 ICO companies with larger ETH treasuries than market caps include Aragon, SingularDTV, Gnosis, FirstBlood, Monetha, HEROcoin, Bloom, Mysterium, Atonomi, Indorse, Musiconomi and Aventus SingularDTV, for example, has an ETH treasury of 201,131 worth about $38 million USD, while the market cap of the SingularDTV token totals $10.7 million On average, ICO projects have moved or liquidated 62% of the amount of ETH they initially raised In other words, ICO projects are still holding 38% of the initially raised amounts Seven ICO companies have public treasuries holding more than 200,000 ETH (or eight, if you count Polkadot, which has ETH stuck in the Parity bug); the seven ICO companies include DigixDAO, Golem, Status, Aragon, Filecoin, Tezos, and SingularDTV Many ICO companies will continue selling ETH to cover operating expenses and fund ongoing business operations, which means investors can expect continued downward pressure on the price of ETH as we move forwardWhen will the downward pressure and ETH selling stop? For some companies, it will only stop when their treasury of ETH is depleted.
7/ Obviously, a lot of the ICO companies will continue selling ETH to cover operating expenses and to fund their businesses. It’s important to realize that the majority of these projects isn’t generating any revenue. And most likely never will.
— Larry Cermak (@lawmaster) September 10, 2018
What does this all mean for you? The price of ETH is at the lowest price it has been in months. Some believe this will be the bottom price for ETH because ICOs have sold off the majority of their ETH holdings. The analysis from Larry Cermak and the team at Diar shows that this isn’t the case, and that investors can expect continued downward pressure on the price of ETH. ICO companies will continue selling ETH to cover operating expenses. The longer the companies fail to become profitable, the longer the downward pressure on ETH will continue.
8/ This in turn creates ETH selling pressures, which are unlikely to go away any time soon. The price is affected not only by the ETH mining issuance but also by ICO companies liquidating to cover their expenses.
— Larry Cermak (@lawmaster) September 10, 2018
You can read the full article about ETH holdings among major ICO companies here. A new issue of Diar comes out every Monday with an emphasis on digital currencies, assets, payments, and regulations.
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