The ICO liquidity crunch refers to a period characterized by a dwindling supply of cash resources while the demand for ICOs remains high. Seasoned investors understand that ICOs are dependent on the consistent supply of cash or traded cryptocurrencies to meet set goals and objectives. This phenomenon boils down to two crucial questions: are we walking down a path of an ICO liquidity crunch? And if so, how are we prepared to handle this menace with the proficiency it requires?
The importance of critically analyzing each ICO cannot be stressed enough. Most investors are contemplating what to do next. If you don’t understand the exact exchanges ICO cryptocurrencies will be registered on, then don’t invest. As an investor, understand the following critical information:
- Poloniex hardly lists any new tokens
- Kraken is not expected to release any additional tokens until February
- Binance has over 6,000 pending applications
- Bitfinex isn’t regularly registering new tokens
The above crypto exchanges paint a stark picture on the current predicament faced by investors. Also emerging exchanges often charge high rates for listing.
The Securities and Exchanges Commission tightens its grip
The SEC is pursuing legislative avenues to protect novice investors from untrustworthy ICOs. Several Asian countries have banned ICOs or enforced stringent measures aimed at protecting investors.
Delisting has recently emerged as a trending topic in the crypto industry and in the Bitcoin Talk threads. Delisting refers to the deregistration of tokens based on unlawful business practices. For instance, Mysterium recently grabbed the headlines after Bittrex abruptly removed it from the exchange. Even though Mysterium posted high trade volumes, the immediate delisting plunged its associate coin, Apex, into an abyss. Alternatively, Bittrex which happened to be a leading crypto exchange is now a shadow of its former self. What is here today could be gone tomorrow.
The way forward
Traders should consider minimizing on over-leveraged coins based on their minimal growth and instead divert resources into more liquid currencies such as Ethereum and Bitcoin.
Learning to invest instead of speculating
Analyze vital factors such as team performance, monthly active users, signed contracts, revenue generated and traction. Seasoned investors prioritize cryptocurrency trades based on the High, Medium and Low spectrums. Crashing trades and plummeting prices characterize the Low spectrum. The Medium scope offers a path to redemption despite falling prices, while the high range consists of soaring crypto prices. The medium spectrum provides the best hedge against faltering prices to traded cryptocurrencies.
The biggest post-ICO challenge today
With a good website, excellent coding skills and a comprehensive whitepaper, you can raise capital from any location worldwide. By eliminating government regulations, investors have undoubtedly exposed their money to risk in an equally high-reward industry. Unfortunately, poorly-drafted crowdfunding rules and negligent investors have opened a Pandora’s Box with a single menace at hand: the mismanagement of funds post-ICO.
The solution lies in developing and enforcing better programs to uphold the crypto revolution. The CryptoTask crowdfunding offers an alternative by allowing stakeholders to vote on the project’s progress and, when dissatisfied, the smart contract can be refunded to the initial investors. More importantly, the funds can be released in subsequent stages once the founders have delivered on their mandate.
Acquiring adequate ICO education and conducting due diligence is a hallmark associated with sophisticated investors. The existence of delisted ICOs offers us an opportunity to navigate the ICO liquidity crunch.
