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On Contrary, ICO Projects Didn’t ‘Panic Sell’ as ETH Falls – Report

A new study has tried to refute the “panic sell” thesis that many ICO projects sitting on large amounts of Ether soldout or were going to sell out of fear of the dwindling price of the Ethereum network’s asset. The BitMex Research study deems this view as either false or to have occured at a lesser extent than had been expected.

As the price of Ether falls by almost 85% from its all-time high US$1,400 in December 2017, the theory around is that many ICO projects with large amount of Ether had to “panic sell’ so as not to miss out.

(Source: Ethereum Blockchain, BitMEX Research, TokenAnalyst, Token Data, Price data from Etherscan)

Total tracked Ethereum holdings of the 222 ICO projects (daily data) vs Ethereum price
(Source: Ethereum Blockchain, BitMEX Research, TokenAnalyst, Token Data, Price data from Etherscan)

However, going by the 222 projects the exchange and TokenAnalyst looked at, their ICO treasury accounts have a much lower level of exposure to the price of Ether than many may have thought. The sampled projects raised US$5.5 billion worth of Ether. The study says they have already sold the same amount of Ether they originally raised in USD terms leaving them with a holding of US$830m worth of Ether – around 25% of the Ether they originally raised.

(Source: Ethereum Blockchain, BitMEX Research, TokenAnalyst, Token Data, Price data from Etherscan)

(Source: Ethereum Blockchain, BitMEX Research, TokenAnalyst, Token Data, Price data from Etherscan)

It concludes that even at the current $230 price, projects are still sitting on unrealised gains, rather than losses:

The 3.8m Ethereum still on the balance sheets of these projects may not have that much of an impact on the Ethereum price, as it represents a reasonably small proportion of the 102 million supply of Ethereum. At the same time, on a macro level, the projects may be feeling reasonably confident rather than needing to panic sell.

Though the study couldn’t say whether the projects invested the money they raised through ICOs well or developed useful products and services, it touched on how the projects’ scramble for developers could inflate the cost of hiring them which may plague the cryptocurrency ecosystem with higher costs.

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