During 2017, Initial Coin Offerings (ICOs) have been expanding. More and more investors look forward to invest their funds in these projects, despite the fact there have been important scams that damaged the cryptocurrency industry.
However, a new Digital Tulips research published by the Boston College Carroll School of Management states that the average ICO investor is still raising in a significant profit.
Digital Tulips Research
The 54-page report, titled “Digital Tulips? Returns to Investors in Initial Coin Offerings,” analyzed 4 003 ICO, which took place since January 2017 and in the aggregate raised $ 12 billion. The specialists followed the tokens rates over different periods.
So, the price of the token after listing on the cryptocurrency exchange, grows by an average of 179% compared to the original one.
But even taking into account the fact that investors lose money, if the token does not manage to enter the cryptocurrency exchange within 60 days after the completion of the ICO, the average investor still receives an 82% profit.
Investors who purchased coins already after it entered the cryptocurrency exchange, also received a high income. Those who kept tokens for a long time earned from 140% in three months to 1 880% per year. Investors who held cryptocurrency for a 180-days, on average, fixed a 430% profit.
The researchers said:
“Our paper shows that ICOs investors are compensated handsomely for investing in new unproven platforms through unregulated offerings. It suggests that scams, while plentiful in number, are not as important in terms of stolen capital because investors are shrewd enough to spot (and underfund) them.”
According to Hugo Benedetti, one of the authors of the study, he was “very surprised” by such results, especially considering how often the media write about fraud in this area. However, he refused to make long-term conclusions about what this means for the further development of the industry.
“Well, that’s a tricky question, because nothing guarantees that the market will continue to allocate capital as proficiently as it has so far. Retrospectively, we see that even though there have been many underperformers (ICOs that list or trade below their issuance price), on average the returns to the industry have been largely positive,” Benedetti said.