Cryptocurrency Investment Analysis

Analyst Reports 90% of Cryptocurrency Startups will fail

Investment in the cryptocurrency space is one that is known for being high risk with casually rates being high, but is attractive enough that investors often overlook in hopes of a fortune coming their way. Of course, as many know, there have been several digital assets which have generated multiples of 10, 100 and even 1000 times the investment. However this is only if, as an investor, you got in while prices were low. The reality of the matter is successes like that are rare and one important analyst is advising investors to wake up.

The analyst, who uses the name“Wolf of Qtrade.io”, has a loyal following on Twitch that follows his look at the cryptocurrencies. His latest tweets on the subject warns followers that the overwhelming number of cryptocurrencies and active developments will fail, and it will see investors having to deal with a total loss of capital they have invested.

Wolf has suggested that investors have chosen a path as venture capitalists, and that failure rates can potentially be as high as 90%. While one or two out of ten may be successful, they will need to generate high returns so as to cover losses from failures, however most investors seem oblivious to these risks. A large number speculate based on the hope they will quickly get rich or based their investing on fear of missing out on the “big one”

Wolf commented:

According to Wolf:

“No matter how these small projects are financed (via an ICO, pre-mine, fair launch, dev reward, self-funded etc.), they are essentially young startups in a completely unproven technological field. Such startups are known to have an extremely high failure rate of about 90%.”

Those earlier startups failed for a multitude of reasons explains Wolf: “Early stage startups fail because the promised technology turns out to be impracticable, because they cannot find a product-market fit, because their teams fall apart, because they go bankrupt due to mismanagement, etc.” The rate of failure in the cryptocurrency space has been intensifiedas a result of the Ponzi schemes and outright fraud, as well as various exit scams.

Billions of dollars have been raised by Initial Coin Offerings (ICOs) for crypto development efforts in the previous few years. A different take on techniques for crowd-funding techniques have done little for comply with security registration laws, however, a crackdown by regulators is taking place around the world. This is seeing transforming into Security Token Offerings and that makes improved investor protection legislation a good thing, However, due diligence by investors to protect themselves is necessary.

Although funding milieu for crypto is changing, it stillis reminds of the crazier days of the internet. In those days, investors invested millions on ideas relating to the web, even when not initially a proven concept. However, when the internet bubble explodes, venture capitalists were met with a large number of failures in their portfolios. That resulted in many firms moving towards those funding venues seen as less risky and that saw a funding vacuum needing to be filled.

The “funding vacuum”, if you wish to identify it as such, has managed to attract a substantial number of “new age” investors who have little knowledge relating to the “internet craze” nor do they understand how damaging it was to those it impacted. The “Wolf of Qtrade” is one who feels an obligation to advise those who follow him to use caution. His simple advice is that investors only invest what can be afforded to be lost stating “build their portfolio around high-cap coins such as Bitcoin and Ethereum.”

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