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After the ICO bubble burst, how are crypto coin sales rebounding?

Initial Exchange Offerings (IEOs) are a new instrument used by cryptocurrency investors to raise a rapidly expanding amount of money. Initial Coin Offerings, which were once a popular way of raising funds, have been replaced by IEOs, which are designed to avoid regulatory pressure and continue to meet the seemingly insatiable desire for digital gold. According to CoinSchedule.com, a crypto data tracker, almost $180 million has been raised in 23 offers in recent months, as revealed in a Bloomberg story.

Initial Public Offerings (IPOs)

A total of $180 million was raised through 23 offers.
Users and token teams are in high demand.
Bloomberg is the source of this information.

The ICO Bubble Has Burst
Unlike ICOs, which give digital tokens to investors directly, IEOs use a crypto exchange to act as a middleman. Underwriters, such as cryptocurrency exchanges, take up to 10% of the total sale revenues. According to Bloomberg, Bill Shihara, chief executive officer of Seattle-based exchange Bittrex, which recently staged its inaugural IEO, said, “It has the potential to be greater than the ICOs of 2017.” “Both our users and token teams are expressing strong interest.” ICO proceeds, on the other hand, have decreased from $5.8 billion in June of last year to $208.6 million last month, according to Bloomberg.

Risks Associated with IEO

IEOs have aided in the recovery of the digital coin market, which has seen a lot of volatility over the years, especially since bitcoin’s fall in 2018. However, according to some industry analysts, IEOs carry a large degree of risk due to issues such as the inability to standardize vetting across exchanges and ongoing regulatory ambiguity.

Former Securities and Exchange Commission lawyer Zach Fallon cautions that the new popular means of obtaining cash in the digital asset industry “takes everything from an ICO and makes it worse.” He told Bloomberg that the design of IEOs makes them more open to regulatory scrutiny because many exchanges encourage issuers to solicit funds using exchange-specific tokens. Other problems, including as fraud and a lack of due diligence, put IEO investors in jeopardy.

Nonetheless, the value of exchange-issued tokens is soaring. According to Jeff Dorman, partner and portfolio manager at Arca Funds, tokens issued in IEOs have increased by 200 percent on average.

Looking Forward

According to the Bloomberg Galaxy Crypto Index, which measures many of the top digital currencies, a jump in IEOs comes as crypto prices appear to be overbought once again. Despite rising roughly 25% since the beginning of the month, the index is still down over 80% from its record high, according to Bloomberg.

What do you think?

Written by Trevanna Gordon

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