November 16, 2018
A few interesting points from some research I did for an upcoming post. These numbers are based on monthly closing candles on Coinbase and Bitstamp and don’t reflect the exaggerated highs and lows of this manipulated market.
- ICOs that raised capital in September 2017 that didn’t keep 100% of proceeds in ETH are still in the green with “100% BTC” and “33.33% BTC, 33.33% ETH, and 33.33% XRP” being ideal allocations when taking liquidity and slippage into account.
- ICOs that raised capital just four months later in January 2018 are pretty much REKT’d across the board. A 100% allocation in ETH would’ve resulted in a 82.18% drop in value.
- ICOs that “reduced risk” by spreading funding across ETH, XRP, BCH, and more should’ve realized that altcoins function as leveraged positions of Bitcoin. When BTC moves up, altcoins pump more. When BTC moves down, altcoins dump more. Since many ICOs had no intention of selling crypto at the top, this altcoin leverage factor can only increase risk.
- Projects that have existing revenue streams (Cardano, ICON, Ripple, etc.) and projects that have true grassroots communities (Bitcoin, Ethereum, Monero, etc.) will succeed. Those that are stuck in the middle (most projects in the space) will fail due to poor financial management.
- Treasury management is of paramount importance, and this will be the topic of an upcoming post. These numbers really make me question the intentions of many companies in this space. The truth is many projects never considered proper treasury management at the height of the bull market. After raising tens of millions of dollars in an ICO, is it really necessary to keep the money in a hyper-volatile asset? Considering some of these projects are somehow operating after losing up to 82% of their runway, did they actually need so much money in the first place?