Despite warnings from the senate and the Central bank of Nigeria (CBN) Nigerians still invest in cryptocurrencies. As it stands, the value of the bitcoin presently is about $6,385.04. However, researchers Leonard Kostovetsky, an assistant professor at Boston College, Carroll School of Management and Hugo Benedetti, a finance PhD student at the school claimed that their study showed that only 44.2% of startups survive after 4 months after the end of their ICOs. The duo examined 2,390 ICOs and used the intensity of tweets from the startups’ Twitter accounts as a sign of activity. The study was completed before May and the activity span of the ICOs on Twitter showed how active most ICOs were before dying down.
From the study it was revealed that the safest investment strategy is to acquire coins in an ICO and sell them on the first day. Although many investors may not be able to access this option, but acquiring and selling the coin within the first six months is advisable. Kostovetsky explains that returns have been declining over time and not as high as investors expect them to be. However, the study reveals that ICOs rarely outperform other cryptocurrencies.
Kostovetsky explains, “People often look at returns and say this is a great deal, but we teach in finance that return is a compensation for risk. These are stakes in platforms that have not yet been built, that have no participants yet. There’s a lot of risk. The majority of ICOs do fail.”
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