More than a half of the startups funded with initial coin offerings (ICO) closed within four months, a study by Boston College finds.
The college tracked 2,390 ICO-financed companies through their Twitter posts and found that only 44.2 percent were able to survive for more than 120 days while the other 55.8 percent stopped operating during the period, Bloomberg reports, citing the research.
Given that one in every two ICO-funded companies is bound to collapse in such a short period, ICO investors are definitely exposed to high risks, the researchers said.
ICO investment returns will also drop amid the growing competition as more firms join the ICO bandwagon.
The safest strategy is for investors to sell all the ICO coins on the first trading day, Bloomberg said, citing the researchers.
“What we find is that once you go beyond three months, at most six months, they don’t outperform other cryptocurrencies,” Leonard Kostovetsky, one of the researchers, told Bloomberg. “The strongest return is actually in the first month.”
This article appeared in the Hong Kong Economic Journal on July 11
Translation by Kelvin Ng
[Chinese version 中文版]
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