The initial coin offering (ICO) sector sure is an interesting one regardless of the many many ups and downs in a short space of time. However, it is always fascinating to watch what happens next.
Along with the turbulent cryptocurrency markets, there has been a reverberation of this sentiment in the ICO market as of late. This has led to a lot of projects keeping their Ethereum tokens in reserve, with some of their reserves even bypassing the current size of their actual market cap levels.
Gnosis recently made a disclosure about their prediction market platform based on Ethereum. They talked about how they had no need as a company to rely on their reserves of 200,000 ETH that they accumulated during their ICO last year for another 6-7 years.
This comes after the price of Ethereum has dropped significantly in recent weeks, having fallen below the $300 mark. It has especially dropped significantly when compared to other major cryptocurrencies.
With Gnosis, their reserve of 200,000 ether is worth about $55 million at the current market price, which is $22 million in excess of their current market value which is $33 million.
Different ICO projects have the same situation, such as Aragon, Bancor, and Tezos.
The reason this is the case is due to there being a low of poor momentum when it comes to the smaller cap tokens when compared to the more major cryptocurrencies such as Ethereum and Bitcoin.
For the most part in the ICO sector, the valuations are determined largely by speculation. This is why the vast majority of launched ICOs tend to fail making it difficult for investors to actually profit off of their investments in the long term.