With Q1 of 2019 done, prominent data compiling companies are already releasing their reports on how the cryptocurrency market behaved in this past 3 months. In this article, we will be reviewing the data reported by InWara, a well known data analysis company that focuses on ICOs and, recently, in the rise of Security Token Offerings (STOs).
Before we begin, it’s important to remember that, even if ICOs are but a part of the whole cryptocurrency market, most of them end up injecting liquidity into the market and setting trends on what the general public is interested in, so their influence can’t be ignored. With that in mind, let’s look at some data:
ICOs in the low
The boom of ICOs might as well be over, as the number of listings has been falling steadily since Q2 last year. Comparing to the 741 listings registered in the last period, only 285 were reported in Q1 2019, which represents a drop of 61%, contrasting with the previous ones of 27% and 26% for last year’s periods.
In terms of location, Singapore, the UK and the US remain in the top 3 of countries in terms of ICO listing, but an important remark to make is that the top investor is the UAE (with 21%), while the UK falls to third place (13%), Singapore to the fifth place (9%) and the US to the seventh place (8%). This means that investors are mostly located in very different environments compared to where the technologies are being developed, and is also a good sign of greater international reach.
One may make the connection of this great decrease in ICOs comes from the tightening of the restriction regarding ICOs by the SEC. Even if the SEC can only enforce their restrictions in the US, most of the developers try to comply to them, so their projects have the chance to enter the US market without any last-minute changes.
Security Tokens arise
In contrast of ICOs, a trend that seems to be increasing is the offering of security tokens. After a 20% decrease from Q3 to Q4 in 2018, they increase in 135%, reaching 45 offerings in Q1 2019.
Remember that security tokens are those which value is directly associated with the performance of the company and are treated as equity. If you want more details on how security tokens are distributed and regulated, you can check our paper on security tokens.
Ironically, the regulated aspect of STOs seems to be what makes them popular, as the top country in offerings was the US (11), followed by the UK (8) and Switzerland (4). This seems logical, as the developers are more familiar with their local legislation, which allows them to develop more security tokens in shorter periods of time.
Again, the UAE leads in terms of investments, but this time by an abysmal margin (56%), and the top developers, the UK and the US, only add up to 4% of total investment in security tokens. This can be seen as a lack of interest from investors where tighter regulations apply, and viceversa: places where regulations are looser motivate more investors to take part in this offerings.
Some of the bigger names to launch their security tokens during Q1 2019 are tZero (Overstock.com’s security token trading platform), Hedera Hashgraph (a platform for companies to build their own dapps, similar to Ethereum) and the Jinbi (which links their token to gold via smart contracts, enhancing liquidity and fast trading).
Another important topic to talk about is how the energy and healthcare industries have entered the security token trading environment, with 6 and 5 launches respectively during Q1 2019. This is relevant because it demonstrates how new markets are adopting blockchain as a viable technology for new solutions, especially descentralization and global distribution.
Other important insights
In their report, InWara also highlights some other relevant aspects to the behavior of the cryptocurrency market in this quarter:
Enjin Coin, Binance Coin and Everex are among the best growing currencies in the market for Q1.
Private funding of tokens is decreasing in popularity, and it’s doing so in a fast way.
Coinbase, Facebook and Kraken performing acquisitions of other blockchain-based companies.
Most of these changes from Q4 2018 can be caused by what the community called the “crypto winter” coming to an end and some say Q1 2019 might be showing the first signs of a recovery. We’ll have to keep a close look at the market during Q2 and wonder if the market will keep growing in a healthy way.