Business 3 October 2018

Dennis Wafula

ICOs sold off most ETH holdings for profit, research claims

Contrary to popular belief, many initial coin offerings (ICOs) had the foresight to sell their Ethereum (ETH) and profit off their holdings before the price of the coin fell, according to a new report by BitMEX Research.

ETH’s downward trajectory has partly been attributed to ICO projects panic selling their “large treasure trove of Ethereum” in order to pay their bills. However, a recent BitMEX analysis showed that a lot of ICOs had already sold off their coins before the current steep drop in prices and made profits.

The BitMEX team analyzed 222 projects, which raised an estimated $5.5 billion worth of Ethereum—and were believed to have already sold almost exactly the same amount, at least in U.S. dollar terms.

“These ICOs currently hold 3.8 million Ethereum, around 25% of the Ethereum they originally raised,” according to BitMEX. “However, in US$ terms, these projects have essentially sold the same amount of Ethereum which they originally raised, leaving them a nice holding of US$830m of Ethereum.”

To show the profit and loss realized by Ethereum-based tokensales, BitMEX came up with two columns—one contained the ETH raised and sold by EOS, and another for other projects. EOS, during its year-long fundraiser, managed to raise about the same amount of ETH as the rest of the market put together, which was why it was placed in a separate column.

An analysis of the 222 ICOs showed that close to 15.2 million ETH were raised. Of this number, some 11.3 million coins have been transferred out or sold, leaving behind a collective balance of 3.85 million ETH.

Furthermore, the research showed that older ICO projects that raised their funds in early 2017 got a lot of profits after selling their ETH holdings. In comparison, projects that raised funds in late 2017 and early this year experienced some losses. According to BitMEX, “Despite the peak to trough 85% fall in the value of Ethereum, the projects are still sitting on unrealized profits of US$93m.”

In conclusion, BitMEX noted that ICO treasury accounts have a lower level of exposure to ETH price, saying many projects “essentially made out like bandits”—at least with their ETH holdings.

“Quite what this means for the Ethereum price going forwards is unclear, however we believe we have shown the ‘panic sell’ thesis is either false or will only occur to a lesser extent than some expect,” according to BitMEX.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

COMMENT

latest news

Tesla CEO Elon Musk believes cryptos will replace fiat

Business 20 February 2019

Tesla CEO Elon Musk believes cryptos will replace fiat

Elon Musk doesn’t think fiat will survive against the rise of cryptocurrencies, but he admits it has some problems to solve.

Read More
South Africa ranks top in ownership of cryptocurrency

Business 20 February 2019

South Africa ranks top in ownership of cryptocurrency

A recent survey conducted by Hootsuite and Wearesocial indicates that South Africa leads the world in cryptocurrency adoption.

Read More
Voltaire launches BSV trading amid ‘huge’ user demand

Business 20 February 2019

Voltaire launches BSV trading amid ‘huge’ user demand

True to its word, London cryptocurrency exchange Voltaire.cash has now enabled Bitcoin SV (BSV) trading on its platform.

Read More