The Strategist

Ernst & Young: 86% of tokens are traded below ICO prices

10/24/2018 - 14:56

If in 2017 you invested money in the initial placement of coins (ICO) - a crowdfunding tool for businesses related to cryptocurrency business - it is likely that you lost most of your investment, according to a study by the British audit and consulting company Ernst & Young.

On October 19, Ernst & Young published a report on the dynamics of prices for tokens released within ICO in 2017. It turned out that 86% of such coins now cost less than at the time of placement.

The consulting company published its first report on the ICO market as early as December 2017. Ernst & Young allocated 110 “outstanding” primary offerings, which collected 87% of the total ICO investments of the past year. Recently, the company decided to take another look at previously selected ICOs in terms of profitability. The results showed that if in December last year your investment portfolio consisted of all ICOs from the consulting firm’s list, at the moment your loss would be about 66%.

The lack of due diligence of investors and poor understanding of only the emerging and often deceptive market led to over-estimation of ICOs, which created an aura of “loss of profits” around it. “Despite the buzz around ICO last year, most people are not fully aware of how risky such investments are,” explained Paul Brody, head of innovation at Ernst & Young. “ICO is a completely new way of attracting capital, so investors should understand that it is associated with the risk of slow progress towards the offer of the finished product.”

In addition, according to Ernst & Young, 30% of all ICOs "have lost all the value." The disappointing data was presented in’s February report - judging by the results obtained, 46% of ICO-startups of the last year are already “dead”.

Brody believes that those who are considering investing in the ICO market should act with caution. “At the moment, the potential profit does not justify the possible risks,” he said.