Since the end of last year, the return on investment in initial exchange-traded offerings (IEO) has been steadily declining. In the long term, this tool may not be in demand.
In the first half of 2019, initial exchange offerings (IEO) created quite a stir and were able to give a second life to the ICO concept, which experienced a huge hype in 2017. However, according to the latest data, the age of a new way to attract investment was as short as the ICO.
The Block analyst Larry Cermak analyzed the IEO conducted on Binance, Huobi, KuCoin, OKEx and Bittrex, and found that only Binance currently has a positive return on investment in IEO: 77% relative to the dollar and 38% relative to bitcoin. Other platforms have not been able to repeat the success of Binance and are in a deep minus, the worst indicator is Bittrex.
You can also look at the profitability of individual IEO’s:
The analyst draws attention to the fact that there is a negative correlation between the return on investment in IEO and the period since the campaign was launched. The longer an asset is traded on the exchange, the lower its price falls. This means that you can only earn money in the short term. It becomes dangerous to hold tokens during the “long” period:
The situation with IEO began to gradually deteriorate in the second half of 2019 and only worsened over time. Only 23% of IEO shows positive profitability. In the fourth quarter of last year, this figure was 43%, and in the third – 64%.
“IEO are dead. No one is interested in them in the long term, ” Cermak concludes.
Earlier analysts of the BitMEX derivatives exchange came
to a similar opinion. “Exchanges, traders and participants have had the opportunity to make good money on IEO, but we are skeptical about the prospects of long-term investors,” they wrote.