Getting A Foot In The ICO Market
Crypto is one of the most hotly discussed areas of investment ,and the up-down of many key coins is leading to a lot of media attention. Despite volatility, coins just continue to gain value, and even CNBC has highlighted the rebound of Bitcoin and Ethereum from relatively large losses over recent times. This volatility is something that scares a lot of investors – even those involved with highly variable markets like forex. ICOs offer a way around this for many reasons, but as a retail investor, getting your foot in the door of an ICO can be difficult when you're up against institutional forces.
There is room for smaller investors in the ICO ecosystem. Finding that space is a matter of learning the basics and conducting due diligence. The huge ROIs that ICOs can offer mean that there are unscrupulous operators within the market; the SEC most recently sentenced one investor to six months in jail for partaking in a fraudulent ICO, and John McAffee made international headlines with Wired for similar reasons. Conduct due diligence, and then look to where you can find value. Looking for lower market cap coins, with a more interesting technology base, is a promising way in.
Building a reservoir
You will need crypto funds to get investing. The digital ecosystem is attempting to decentralize and move towards digital currency as the only form of tender. As Hacker Moon explores, it will be essential to have Ethereum or Bitcoin in your wallet – even if not whole coins. Getting comfortable with moving fiat into digital coins and keeping it there is absolutely essential in playing the long-term game with ICOs. This is especially important in getting in ahead of the biggest investors and securing your coins at a decent price-point.
Studies have now been conducted on ICOs, and they reveal an interesting, if perhaps predictable, trend. A 2020 study published in the Journal of Corporate Finance outlines how the inclusion of large, institutional-level investors in ICOs usually led to higher performance post-ICO. A few key factors are in play here. Reputation is obviously one: when institutional investors get involved, the market builds trust. However, there is also a large element of merit. The systems behind these coins are valued by investors. Piggybacking onto ICOs that have been selected or highlighted by institutional investors can give you a good investment in cash terms (as many ICOs start with low dollar equivalent costs), and will develop into equity over time – including a slice of the technology pie.
ICOs are, ultimately, somewhat of a gamble – all stock trading is. Shoring up your bets and reducing the odds to a minimum level, while increasing ROIs to an acceptable level, is best achieved through using institutional investors. Conducting due diligence and ensuring that you have the funds required, as well as the technical know-how, is an essential first step – piggybacking on more successful entities will give you a better chance.