Though the situation seems to recover, we are still in the middle of crypto depression: bitcoin at the price of $20K is far away, ethereum is also not that high as it used to be just a month ago. All those fluctuations inevitably led to panic and confusion. Should I sell? Should I HODL? The crypto neurosis has never been so common among investors.
But not only people suffer — ICOs are impacted as well. As the market feels quite pessimistic, they are not that eager to spend their precious bitcoins or ethers on new coins. Will this project skyrocket or die? The uncertainty is everywhere.
Is it worth investing in ICOs when crypto gets low?
Invisible hand of crypto market
It’s not a secret that in any bull market investors are very optimistic: the prices go higher, the profits skyrocket — happiness everywhere. That drives market participants to buy more, to act more.
If we talk about crypto economy the situation is exaggerated by hundred times. Investing just $10 in bitcoin a person could have received $100 several months later. Or even more.
People got used to the idea that the cryptocurrency market would grow. Always grow. The enthusiasm hit the ICOs: investors understood that buying coins and tokens during crowdsales at very low prices could make them wealthy in future. That’s how many people dived into tokens and crowdsales. The more investors involved the bigger ICO market becomes. It got the hype: one person bought certain tokens — told everyone, then another person did the same. As a result of the chain reaction the project seems to promise enormous profits. And more people invest. Then everything repeats.
And vice versa. When crypto falls down the ICOs can crash as well. For instance, a token bought at the price of $0.1 can be $1 worth a month later — an excellent situation for a token-holder. At the same time it can become $0 — worth completely nothing, with zero value at all. The same chain reaction effect takes place. One projects’ tokens lose value, investors feel afraid to contribute again. They are afraid to lose the game.
When the market is so volatile investing in even the most promising project can become senseless in the end, bringing no profit to the contributor. That’s why people prefer to trust something more stable, for example bitcoins and ethers. Yes, they also can fall, but these coins have been on the market for years. They proved that no matter what they would rise again. It’s just a market correction, we say.
Besides, no one will doubt that even $11K (the current bitcoin price) is huge money. For that reason, investors hold their crypto on the wallets and sleep well with no worries. And with no tokens?
Unknown tokens or top coins: what to buy?
Top cryptocurrency is very pricy to buy, while tokens are cheap indeed. Still most prefer to purchase coins.
The main problem of tokens is that they are terra incognita. Bitcoin has already built the trust of investors (though still many say it’s a bubble), while tokens are issued by an unknown startup company.
When the cryptomarket is on its high, contributors are more prone to trust: they believe in a project’s White Paper, the concept, the team. But as soon as the market goes bearish investors become more sceptical and cautious. And if they feel just a hint of false or uncertainty this ICO will unlikely get the contributions.
While top cryptocurrencies are backed with a long history and statistics, ICOs have nothing to prove the potential growth. What’s more, scam projects continue to mushroom, thus making crowdsales even less appealing. No one wants to buy someone’s tokens and get deceived, right?
One in a million
Bear cryptomarket isn’t a reason for staying away from ICOs. That’s just a reason to remove pink glasses and choose the project to invest better.
Actually startups that are still willing to launch ICO despite the market drop deserve at least attention. It shows several things: that they are not afraid and that’s they are sure of the concept and its implementation. Moreover, such companies even develop faster, work better. If some time ago people invested in just ideas, now they can invest in products, because worthy projects offer not beautiful promises, but something working.
A strong project with a hard-working team and the product ready will find its investors one way or another. Smart investors will not miss a chance to join a promising ICO.
Bear or bull, the cryptomarket will live. And ICOs will remain as well following the eternal law: the strongest win, the weakest lose.