Bitcoin Bears Have Sharp Teeth, Big Appetites and Deep Pockets

Bitcoin Bears Have Sharp Teeth, Big Appetites and Deep Pockets

Bitcoin Bears Have Sharp Teeth, Big Appetites and Deep Pockets

  • The Data Show That Nearly 50% of ICO Investors are Europeans


Nearly 50% of the cash that has poured into newly issued ICOs (cryptocurrencies) in recent years has been raised in Europe, research published Thursday showed.

The report by Atomico, one of Europe’s leading VC (venture capital) firms, found European-based entities have raised $1.76-B through ICOs (initial coin offerings), since Y 2014, representing 46% of funds raised globally.

ICOs have become a ‘cash cow’ for digital currency entrepreneurs, as they have fueled the rapid ascent in the value of cryptocurrencies this year that has raised fears of a bubble that could burst, with Bitcoin soaring more than 1,000% YTD.

Atomico’s research is based on data compiled, and stretches back to Y 2014, although more than 90% of ICO activity has taken place this year, the lead researcher said.

Switzerland drew in nearly 50% of Europe’s total of $828-M of ICO funds in the region, mainly through firms registered in Zug, a low-tax region near Zurich that is also the domicile for many top commodities traders.

By contrast, North America drew in $1.08-B of ICOs, or 28% of a global market that raised around $3.8-B through the issuance of new types of digital currency.

The report predicts that larger European venture firms will begin to participate in ICOs in Y 2018, reversing their historic resistance to what many have seen as unregulated competition to traditional venture funding.

Already, Tier 1 US venture capital firms such as Andreesen Horowitz and Union Square Ventures have actively invested in ICO fundraisers, along with some newer European funds such as Blueyard Capital of Berlin.

“But the region’s most established funds have yet to participate,” the Atomico report states. “This will change in 2018.”

ICOs function as an alternative to traditional, regulated means of fundraising through public stock market flotations or private investments by venture capitalists or other investors.

The new fundraising scheme has flourished in unregulated markets where investment capital is scarce. China and South Korea (where the vast majority of Bitcoin is owned) have banned digital coin sales and trading in digital currencies, while the US Securities and Exchange Commission (SEC) and Fed are weighing tougher rules.

Switzerland, along with Germany and Austria dwarf other parts of Europe with $976-M raised in terms of capital, that is 3X the funding ICOs attracted in Central and Eastern Europe and 4X greater than Britain and Ireland.

But when it comes to the number of ICO projects launched, Central and Eastern Europe are ahead with 162 of the rest of the region, followed by 90 projects in Britain and Ireland.

This is a risk on market, and prudence demands that if you are tempted to participate you are prepared to lose 100% of your investment. It is not for the feint of heart or risk adverse.

Once the derivative market opens this month on the CME, CBOE and NASDAQ, the professional traders will own the market.

Again, the Bears have sharp teeth and big appetites…beware.

Have a terrific weekend.

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