The cryptocurrency markets got off to a rough start in 2018. Falling from an all time high of 830 bn during the first week of January, the total market cap reached a low of around $276 bn on February 6th. Since then, the markets have recovered to roughly 50% of the all time high, trading pretty much sideways around the $400 bn mark.
The volume of funds flowing into ICOs appears to roughly correlate with market growth, reaching record highs of around $1.1 billion during the December boom and around $850 million in January. This is likely due to teams choosing to launch at times when the market is growing considerably in order to ensure both that hard caps are reached and that tokens trade favorably once they hit exchanges.
Source: CoinMarketCap
Source: CoinSchedule
To contrast, the total volume of money moving into ICOs in February has fallen quite substantially. At roughly $380 million, this represents a decrease of around 55% compared with January. The fall is likely due to low market sentiment with investors still fearful following the massive correction, which is evident from the fact a couple of fairly high profile ICOs failed to meet their hard caps quickly. It is also probably down to cash for ICOs drying up due to the sheer volume in past months.
Source: CoinSchedule
What Does the ICO Slowdown Tell us About the Markets?
Not only has the volume of funds raised in ICOs decreased in February, but trade volumes have also remained thin compared with previous months. These two factors indicate that the markets have cleaned up and cooled off quite a lot following the explosion we saw in December and early January, which could be a signal that we are about to enter another bull market.
What do you think the fall in ICOs tells us about the markets? Let us know in the comments below.
