2018 has been a difficult year for ICOs. As a recent EY research showed, looking at the most promising projects at the end of 2017 and at their performance one year later we can see that almost 90% are below their listing price and 30% have lost substantially all value. Just a few of them have working products and some of them accept payments in both fiat currency as well as ICO tokens, reducing the value of the tokens to the holders.
Somebody would say nothing new considering that startups have always been a risky business. However, it is undoubtful that the fundraising model has changed. The public sale phase has now almost disappeared and the level of financial communication required to present a project to a professional investor is higher than 18 months ago. As far as IТm concerned I do not think that the ICO market is close to its end, I just think that investors are much more selective and that before approaching them full due diligence of the project provided by a third party may be useful.
Crypto currencies are also facing a difficult moment with the BTC below $4000 and the ETH below $150.
So, how do I see the future of cryptos? In my opinion, it will shine like never before.
Indeed, there are still two big things that are far to be exploited. The first one it is the blockchain technology that it has not been really implemented yet in the day to day life and it has still to show all its positive effects for investors, users and society.
The second it is in my opinion the first real disruption in the financial world: the STOs. Why? Because there is a multi-trillion market of assets that can be tokenized out there (ICOs represent a drop in the Ocean when compared), and these assets: shares, debt, derivative, cash flows, etc, are too small (or too innovative) to be vehiculated in an IPO. The only alternative today is represented by a Private Equity deal that unfortunately is a long process and it incorporates a huge discount (for the seller) given the high level of illiquidity. Furthermore, the PE investments are available only to professional investors. This is why STOs could represent an answer for both investors and SMEs. Investors can find a new mean of diversification achieving new risk-return combinations, SMEs can find a new way to raise funds for value-added projects. STOs can bring benefits to society and to the economy also considering that strict regulation is already in place and that it represents a first protection shield to investors.
As an advisor with a strong crypto experience and solid roots in banking, finance and private equity, my role is to help companies in launching the STO and recently Andriotto Financial Services has been selected as the main advisor of some of the biggest and most exciting projects on the market.
I believe that this trend will continue in 2019 and in the following years with the support of some prestigious exchanges first (London, Zurich, Malta, etc) and later with the rise new of decentralized ones.
2019 will be (again) an interesting year for the crypto markets.