IEO is facing a collapse? Is the bull market still there?

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In the second half of 2019, as the price of BTC peaked in the short term and the market turnover continued to shrink, the yields of IEOs on major platforms also showed a downward trend, and BNB also fell from a high of nearly $40 to $21. At the same time, research data shows that the current stock of high-quality IEO projects in the market may be exhausted in the next three months. Will the final outcome of IEO be a collapse? Will it affect the bull market of BTC?

Summary

Summary

Topic: IEO is facing a collapse? Most of the best-performing IEO projects on the four major exchanges (Binance, Huobi Global, OKEX, and Gate.io) were issued before July, and the recently issued IEO projects have different performances in terms of project quality, market popularity, and yield. slide. The recent cooling of IEO is due to two factors: the decrease in the stock of unlisted high-quality projects, and BTC entering the stage of shock consolidation. The quality of IEO projects issued by non-head exchanges is generally poor, and basically has no investment value. The IEO projects of the four major exchanges still have certain quality and large-scale exchange users as price support, and the possibility of a short-term collapse is unlikely. The current IEO market is far from the crazy and frothy level of Crowdsale in 2017. Short-term cooling can filter out some low-quality projects and exchanges, which is conducive to the healthy development of the industry as a whole and will not endanger the bull market of BTC.

Market: a slight rebound, facing short-term resistance. The total market value of digital tokens this week was US$265.715 billion, an increase of US$13.59 billion or 5.4% compared to last week; the average daily trading volume was US$51.43 billion, a decrease of 2.5%. The current price of BTC is US$10,353.3, with a weekly increase of 7.9%, and the average daily turnover rate is 8.5%; the current price of ETH is US$170.0, with a weekly increase of 0.7%, and the average daily turnover rate is 32.8%. This week, the BTC balance on the exchange was 879,000, an increase of 5,011 from last week. The balance of ETH on the exchange was 9.287 million, an increase of 112,000 from last week. Among the BICS secondary industries, the market value of the payment and settlement industry rose from 75.1% to 76.6%.

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Risk warning: market volatility risk

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1 Topic: IEO is facing a collapse? Is the bull market still there?

IEO, or Initial Exchange Offering, means that a blockchain project submits an application to a digital token exchange and pays a certain fee, and the exchange sells project tokens to investors at a certain price to help The financing method for the project party to raise funds.

At the beginning of 2019, Binance Exchange restarted the Lauchpad project to help creative blockchain startups raise funds by selling tokens to compliant users of Binance Exchange, and help these projects integrate into the Binance ecosystem.

The first two IEO projects of Lauchpad, BitTorrent and Fetch.AI, achieved 2-3 times the revenue after the market opened, attracting major exchanges to follow suit and launch their own IEO platforms. IEO, which is sought after by funds, has also driven up the price of platform tokens issued by exchanges. BNB and HT achieved increases of 425% and 282% respectively in the first half of 2019.

However, high-quality IEO projects are very limited, resulting in unsatisfactory follow-up performance of most IEO projects after listing. Except for some projects on Binance Launchpad, most IEO projects began to fall within a few days after listing. IEO projects on second-tier exchanges such as Bittrex and Coineal even broke down. A large number of low-quality and even MLM projects flooded the IEO platform. It is becoming another shining sickle for "harvesting leeks".

In the second half of 2019, as the price of BTC peaked in the short term and the market turnover continued to shrink, the yields of IEOs on major platforms also showed a downward trend, and BNB also fell from a high of nearly $40 to $21. At the same time, research data shows that the current stock of high-quality IEO projects in the market may be exhausted in the next three months. Will the final outcome of IEO be a collapse?

1.1 Current status of IEO projects on mainstream exchanges

We counted 11 exchanges that have issued IEO projects in 2019, including Binance, Huobi Global, OKEX, Bitforex, Bitfinex, Gate.io, Bitmart, Bittrex, Coineal, Kucoin, LAToken, and ZBG. According to statistics, there are 69 IEO projects still in transaction, with an average rate of return of 65.35%. However, it is worth noting that exchanges such as Coineal, LAToken, and ZBG have some IEO projects that have stopped trading, and there are certain risks.

Judging from the average return rate of IEO projects, exchanges are severely polarized. Binance topped the list of exchanges with an average project yield of 148.17%, and its platform token BNB also achieved a 425% increase in the first half of the year, leading the TOP10 tokens. The average project yield of OKEX and Gate.io is also higher than 100%. However, at the same time, Bittrex, Bitfinex, LAToken, Kucoin and other exchanges have negative yields on IEO projects, and there are also some IEO projects that have suspended trading, which means that most investors participating in IEO on these platforms are in a state of loss.

From the perspective of the number of IEO projects, Gate.io is far ahead with 12 projects. Although Gate.io started the IEO business late, it has successfully stood out from the second-tier exchanges by virtue of the rapid issuance of platform token GT and the continuous launch of high-quality IEO projects. SERO (SuperZerocoin), which conducts IEO on Gate.io, ranks first among all IEO projects with a rate of return of 1133%.

From the overall performance of IEO projects, as of September 7, 2019, 5 of the 6 IEO projects launched on Huobi Global are still profitable (based on the IEO issue price), accounting for 83.3%; Profit projects accounted for the same 83.3%.

From the perspective of time, most of the IEO projects with the best market performance on the four major exchanges (Binance, Huobi Global, OKEX, and Gate.io) were issued before July. Yields have declined.

According to the IEO project data provided by Coincodex, we have found through statistics that the highest prices of most IEO projects appear within 1 to 3 days after the start of trading. We use the return rate on the next day of IEO listing as an indicator to measure the short-term popularity (popularity) of the project.

It can be seen that ERD (941%), AKRO (432%), WXT (296%), and VIDT (622%) have the highest returns on the next day for the IEO projects of the four exchanges, and their IEOs end in July. 2nd, July 16th, July 1st, and July 8th are very close to the time when BTC hit a new high for the year. The next-day returns of the most recent IEO projects of the four exchanges were 49%, 213%, 144%, and 1.5%, which are far lower than the average returns of the four exchanges’ IEO next-day returns of 366%, 243%, and 257%. and 160%. This shows that the popularity and money-making effects of IEO are gradually declining.

1.2 No projects to list, IEO is facing collapse?

According to an analysis report, according to Hypernum’s data, a total of 606 projects conducted crowdsale or private placement in 2018, of which 396 projects have been listed on the exchange. From the remaining 210 projects, projects that will not issue tokens, air, and fraudulent projects are excluded. At present, the number of high-quality projects remaining in the market is small, which is not enough to support major exchanges to continue to issue IEOs.

The reality may be even more dire. Among the IEO projects listed on Coincodex that we have counted, about 80 are issued by well-known exchanges and are still trading. Among them, less than half of them have a circulating market value of more than 2 million US dollars, most of them have lost their liquidity, their daily turnover is only tens of thousands to hundreds of thousands of US dollars, and their yields are generally poor. These IEO projects are not high-quality anyway. Not even indexed by sites like Hypernum or Coinmarketcap. Although the quality, liquidity, and yield of projects issued by the four leading IEO exchanges are guaranteed to a certain extent, the effect of making money is still weakening recently. The number of IEO projects issued by these four exchanges is about 5 per month, but there are very few projects that have completed crowdfunding or private placement in the market and can meet the IEO standards of the four major exchanges. If we want to ensure the sustainability of IEO If there is no sex, it can only lower the screening criteria for projects, and ultimately damage the interests of exchange users.

We believe that the quality of IEO projects issued by non-top exchanges is generally poor, and there is basically no investment value. Referring to Chart 1, most of the IEO projects listed on the second- and third-tier exchanges accounted for less than a quarter of the unbroken projects. Some IEO projects of Coineal and LAToken failed to go online or stopped trading, and basically "collapsed". The IEO projects of the four major exchanges of Binance, Huobi Global, OKEX, and Gate.io still have certain quality and large-scale exchange users as price support, and the possibility of a short-term collapse is unlikely. At the same time, the recent poor performance of the secondary market for tokens is also an important factor for the weakening of IEO project prices. It is undeniable that the IEO market will face a period of difficult ice before the market can recover.

1.3 Will the cooling of IEO lead to the premature end of the bull market?

According to Coinschedule statistics, the IEO financing amount in 2019 reached 1.65 billion US dollars, of which the Bitfinex exchange platform token LEO financing amounted to 1 billion US dollars. Excluding LEO, IEO financing is concentrated from March to August, with an average monthly financing amount of 107 million US dollars. The amount of IEO financing in July and August was 51.87 million and 65 million US dollars respectively, showing a downward trend, and IEO is cooling down.

But the current IEO market is far from the crazy and frothy level of Crowdsale in 2017. Temporary cooling can filter out some low-quality projects and exchanges, which is conducive to the healthy development of the industry as a whole. In the long run, it will benefit the IEO projects of future leading exchanges. The cooling of IEO will neither affect the long-term trend of BTC, nor will it change the two major driving forces of the BTC bull market: BTC production reduction and the Fed's interest rate cut expectations.

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2 Market: Slight rebound, facing short-term resistance

2.1 The overall market: the rebound rate is gradually declining, facing short-term resistance

This week, the total market value of digital tokens was US$265.715 billion, an increase of US$13.59 billion or 5.4% compared to last week. This week, BTC reconfirmed that the support around $9,000-9,500 was valid. It rebounded to a maximum of $10,900 and then fell back. The rebound rate was lower than last time.

The average daily trading volume of the digital token market was US$51.43 billion, a decrease of 2.5% from last week, and the average daily turnover rate was 19.3%, a decrease of 0.8% from last week. BTC's market value accounted for 69.8%, a new high for the year.

This week, the BTC balance on the exchange was 879,000, an increase of 5,011 from last week. The balance of ETH on the exchange was 9.287 million, an increase of 112,000 from last week. The balance of BTC and ETH on the exchange shows an increasing trend, indicating that the decline is facing certain selling pressure.

The USDT market cap is $4.067 billion, an increase of $50 million from last week. USDT premium rate is 0.3%. BTC prices rebounded while USDT was able to maintain a premium, and the rebound has a certain degree of sustainability.

2.2 Core tokens: BTC rebounded slightly, mainstream tokens did not follow

The current price of BTC is 10353.3 US dollars, with a weekly increase of 7.9% and a monthly decrease of 13.3%. This week, the average daily trading volume of BTC was 15.8 billion US dollars, and the average daily turnover rate was 8.5%. BTC rebounded slightly this week, facing pressure at $10,800.

The current price of ETH is 170.0 US dollars, with a weekly increase of 0.7% and a monthly decrease of 24.9%. This week, the average daily trading volume of ETH was 6.17 billion US dollars, and the average daily turnover rate was 32.8%. ETH has fallen sharply this month, and has not followed the rebound of BTC, and its trend is weak.

The current price of EOS is $3.23, with a weekly increase of 0.3% and a monthly decrease of 23.7%. The average daily trading volume of EOS this week was US$1.32 billion, with an average daily turnover rate of 42.9%. EOS also rebounded weakly, and the upper selling pressure was severe.

The current price of XRP is $0.252, with a weekly decline of 1.5% and a monthly decline of 19.1%. The average daily trading volume of XRP this week was $1.01 billion, with an average daily turnover rate of 9.1%. XRP is weaker and has broken below long-term support levels.

The volatility of major tokens dropped slightly this week. The monthly volatility of BTC was 16.8%, down 1.7% from last week; the monthly volatility of ETH was 19.0%, down 0.5% from last week; the monthly volatility of EOS was 18.0%, down 1.7% from last week. A decrease of 1.9% from last week; the monthly volatility of XRP was 16.0%, a decrease of 0.4% from last week. BTC is still in a triangle convergence trend, and the direction is still unclear.

2.3 BICS industry: both the number of payment and settlement industry and the proportion of market capitalization have rebounded

Among the top five BICS (Blockchain Industry Classification Standard, Blockchain Industry Classification Standard) secondary industries, the market value of the payment and settlement industry rose from 75.1% to 76.6%. The market value of supply chain, physical assets, and professional services decreased significantly.

The BICS secondary industry with a significant increase in the number of tokens this week is payment and settlement, an increase of 4 compared with last week; the BICS secondary industry with a significant decline in the number of tokens is operating platforms, leisure and entertainment, and banking services. Weeks fell by 3, 2, and 2 respectively.

2.4 Market view: Bakkt opens BTC custody, which is expected to break through resistance

BTC encountered some resistance after rebounding to the downward trend line of $10,800, and is currently consolidating in the range of 10,200-10,600. As MA120 gradually rises, BTC will gain strong support around $10,000. On September 6, Bakkt officially launched BTC custody services, and launched a physical delivery BTC futures contract on September 22, which is a great benefit for BTC.

The long-term bull market will continue. In the long run, high-quality tokens have a lot of room for imagination. It is still in the early stage of the bull market, and callbacks are rare opportunities to increase positions. Investors can make asset allocation according to their own conditions.

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3 Output and popularity: The difficulty of BTC is rising, the difficulty of ETH is decreasing, and the public attention is low

This week, according to Google Trends, the search popularity of the term Bitcoin is 11, and the search popularity of Ethereum is 6, which is slightly lower than last week.

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4 Industry News: The field of digital currency payment has been valued by regulators

4.1 Shenzhen Local Financial Supervision Bureau: The work related to digital currency research is gradually advancing

According to the Securities Times, the reporter learned from the Shenzhen Local Financial Supervision Bureau that related work, including promoting the reform of the GEM registration system and digital currency research, is gradually advancing.

Last month, the Central Committee of the Communist Party of China and the State Council approved the establishment of a pilot demonstration zone in Shenzhen, supporting Shenzhen to take the lead in exploring and researching in the field of digital currency and payment, and providing soil for the application of digital currency in the market. If the research on digital currency in Shenzhen can succeed smoothly, it will have an immeasurable impact on the domestic market.

4.2 The US asset management giant plans to launch a government money market fund that invests in blockchain stocks

US asset management giant Franklin Templeton Investments has submitted a preliminary prospectus to the US Securities and Exchange Commission (SEC) on September 3 for a government money market fund that will invest in a range of products, such as US government securities, purchase agreements and blockchain-based shares. However, the fund will not invest in cryptocurrencies. In addition, Franklin Templeton chose to record the ownership of fund shares through the Stellar network. The fund’s investment manager believes that blockchain-based shares will increase transparency and reduce settlement times.

4.3 The central bank's digital currency has begun "closed-loop testing"

A dedicated team from the central bank's digital currency research laboratory is developing the central bank's digital currency system in a closed environment, away from the central bank's headquarters in central Beijing, a person familiar with the matter said. The team has been working from the separate location since early summer so it can fully focus on the project, the people said. Moreover, this work by the central bank was accelerated with Facebook unveiling its Libra vision in June. According to a Sept. 4 report by China Daily, another PBOC official said that "closed-loop testing" had begun, simulating certain payment schemes and involving some commercial and non-government institutions. He added that the central bank would disclose more details later.

4.4 Chief U.S. Economist at JPMorgan Chase: The Fed is expected to cut interest rates three more times this year