ICO Bubble

in #cryptocurrency4 years ago

ICO Bubble

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Reading this article earlier today, from the skilled writer Aaron van Wirdum, I got reassurance about some of the things I've been posting about. In his post he says:

And it is a bubble. The valuation of many of these projects is far beyond reason, and the evidence that many of the investors have no idea what they’re putting money into is abundant. And that’s without even getting into some of the outright fraudulent claims.

Yes, I totally agree. Even though the ideas presented can be very, very exciting, we can't give money away. Investing is highly different from liking. You don't buy a stock uniquely because the underlying company is good, if you do so you're doomed to loose money. You buy a stock because a good company is trading at an attractive price. Or so says Ben Graham.

To infer whether a price is attractive, you have to be able to evaluate a company. ICOs should be no different.

Even though start-ups are a whole different beast when compared to stocks, the rationale should be no different. The valuation technique might change, but the logic does not.

Investors need to understand that loving a business model and believing in it, is not a sufficient condition to enter an ICO. The price which you pay for it is of utmost importance, it can kill your investment.

Uncapped ICOs for instance have a high risk that is not related to the business. What if everyone buys into it ? The company will have to grow much stronger for you to make a profit. Perhaps, to unrealistic levels.

Obviously, there are many examples of crazy profts made on ICOs, that make us all excited about taking our piece of the pie. But rushing into whatever tokens are shown to us, is not the way to go.

With that in mind we've been writing several posts about ICO Valuation. Even though our series of posts is far from over, we plead investor to get more conscious about it, before a bubble bursts and ICOs are doomed. ICOs might be good. But we have to be conscious and technical about it. We don't want enough bad news out there to take it to a Red Zone from which it might never be able to recover.

ICO Valuation Series:

Few ICOs Reviews:

Cheers !

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ICO's are insane right now. I agree many ICO's are overvalued but the overall crypto market is still under valued.

Couldn't agree more. Although I might say:

1- I think it is unreasonable to think that the crypto market correction will boost every single ICO. I believe abandoned or highly overvalued projects will have no value / will underperform as a investment.
2 - We've been seing abit of a trend of govern issued bonds (starting with Singapore). If that ever comes to be dominant among countries, maybe the crypto-strict-currencies, won't grow that much in value.

I like your point though.

What are some of the most overvalued ICOs in your opinion? Bancor is one in my book.

Bancor is my absolute #1 as well. I guess Tezos and BAT would be on the top as well.

The unregulated ambiance of the ICOs is a great platform, actually they are more scrutinized from thousands of hackers and tech geeks than a Goldman Sachs style fresh MBA okayed kind of a typical IPO. There will always be suckers, the non-idiot must not have to pay for that stupidity. As a libertarian I'm all in favor of this freedom.

Agreed there. It is a great platform. I don't feel like regulators and all have the intent to overregulate it. But the thing is, if we have enough "innocent" people losing enough money , they'll just have to. Regardless of the way I feel about regulation and being a libertarian, that's likely a fact. An undesirable fact, btw.

The prices in crypto are all inflated (apart from Bitcoin IMO). This is a trend that started in the tech world over a decade ago and it has been exaggerated even further in the blockchain world.

Do you want to tell us a bit more about why you think Bitcoin isn't ? I'm highly interested in the subject.

I put it to some perspective on this article comparing the "money sizes".

The way I see it, we can head down two paths:

  • Bitcoin and decentralized crypto take over the world. In this scenario, all the reigning currencies (I wouldn't dare to guess) are incredibly undervalued right now.

  • We head towards govern issued tokens (old economy, new protocol), then the purely currency coins (not companies' tokens) are overvalued, since their value will probably approach zero.

Makes sense to you ? where do you stand on that ?

Interesting post - these things are very subjective. I think I may consider answering this in a post.

All right then. I'll be following you, expecting to see it !
Make sure to post the link here whenever it comes out.

in complete agreement with you. This is absurd and completely ridiculous. I'm sure there will be some ICO's that will hold true to their claims, but can't be that every single one will be a great investment. Hold on to your hats people... who knows. cheers.

i haven't gotten into any yet. Thank you!

Just to make sure you get what I'm saying. I'm not at all against it, I've entered quite a few myself. The one thing I'm urging is that everyone thinks it through. If we get enough bad examples out on the street we'll sure piss off a bunch of regulators and traditional investors, and that will likely limit the whole of crypto and blockchain economy's growth.

Regulators go home.

The bubble is on ...lets catch some

True enough. One good use of a bubble is get in and get out early ! Maybe if investors are not-greedy enough they can lock in some profits. Honestly though, I'd rather think of it as something that came to stay, but we gotta do our part, you know what I mean ?

Scams must be pointed out, as the serious ICOs , forums like these are the way to do it, to pint the good and the bad. A "scam watch" is a good idea.

Love the idea !

Better stay cool. Buy low and sell high. ... followed n upvoted

Say word ! thanks for the support.

ICO's are very risky be careful!