New Study-Investors Sees 82% Earnings from Crypto ICO Tokens

Investors Sees Earnings from Crypto ICO Tokens

An investor is expecting to gain significantly from investments in cryptocurrency tokens, according to a new study published by the Boston College. 

Those who have placed their money on initial coin offerings (ICOs) is anticipating to yield returns of about 82 percent, based on the 54-page report entitled “Digital Tulips? Returns to Investors in Initial Coin Offerings” of the Boston College Carroll School of Management. 

Average returns from the initial token sale price to the first day’s listed market price on a cryptocurrency exchange is estimated at 179 percent, with holding periods lasting for approximately 16 days. 

Researchers implied substantial negative returns – negative 100 percent – to these ICOs in instances where the issuers were not able to list their tokens within the first two months. However, in such events, they saw the representative investor bolstered investment to almost half of their total holdings.  

The study showed crypto tokens “continue to generate abnormal positive average returns,” with those investors who held their tokens for longer periods of 180 days seeing the highest returns, between 150 percent and 430 percent.” 

“While our results could be an indication of bubbles, they are also consistent with high compensation for risk for investing in unproven pre-revenue platforms through unregulated offerings… [Our paper] 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,” Boston College researchers said. 

The report noted a “significant ICO underpricing” upon analyzing data of more than 4,000 planned and realized ICOs. Collated details represent a total of $12 billion, almost all of them since January last year.  

High-profile exit scams involving cryptocurrency tokens have caused negative media coverage to this virtual currency-based fundraising scheme. 

To heighten awareness among investors, the US Securities and Exchange Commission (SEC) recently launched a campaign by unveiling a website dedicated to deceitful ICOs aimed at mirroring the usual red flags of fraudulent token sales. 

Amid the not-so-good popularity, supporters of the digital currency continue to promote ICOs, saying it offer a convenient means of gaining support for upcoming projects. 

This week, South Korea said it would lift the moratorium on local ICOs after imposing the ban last September.

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