It's well known that approximately 80% of ICOs are scams and over 50% fail within first four months of operations. The return on investment in ICOs is in steady decline because of the incredibly high business, regulatory, and legal risks inherent to this nascent space. Aggressive market manipulation and widespread pump-and-dump schemes increase chances of losing investors’ money.
Despite all these negative factors, retail investors still participate in token sales with no certainty how ICO project will perform and what will the value of its token be. We can observe not a high risk/return ratio here but actually a very high risk/uncertain return correlation. On the risk side of the equation, all ICO investments are exposed to extremely high idiosyncratic risk as investment is made in a single ICO project with no historical performance and track record.
Investors’ demand is driven primarily by expectations of high return on investments. Investing in liquid digital assets that have well established teams and business models could be an alternative to ICO investments. However, even in this scenario, retail investors can’t efficiently manage their capital as they are not qualified enough to perform token price valuation, fundamental analysis of the blockchain project, technical analysis of the token price movements, and legal and regulatory due diligence.
Another type of investors are crypto hedge funds that are managed by investment professionals. Generally, top-tier crypto hedge funds with hundreds of millions of US dollars under management have excellent historical performance and track record. Crypto hedge funds that use active portfolio management approach have the ability to deliver impressive returns even during bear market conditions. For example, Pantera Bitcoin Fund's lifetime return was over 10,000% as of the end of July, 2018, net of fees and expenses.
Crypto hedge funds can earn substantial returns leveraging their deep knowledge of market trends, strong investment expertise, and rigorous due diligence. When investing in ICOs, crypto hedge funds have access to exclusive private deals with deepest discounts and can invest in the most promising blockchain projects that are not opened to public. Hedge funds provide their investors with monthly investor reports and perform annual audit to confirm the transparency of hedge fund operations and actual holdings.
Unfortunately, regular investors are not able to invest in crypto hedge funds, at least in the United States. Crypto hedge funds typically require multi-million dollar minimums and are designed for high-net-worth individuals, family offices, and institutional investors. Under the US securities laws, in the context of a natural person, an accredited investor is an individual who have a net worth of at least $1,000,000, excluding the value of one’s primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year.
ELEMENTS (
www.elements.cx) is the first blockchain project that solves this issue. ELEMENTS offers easy access to top-tier crypto hedge funds worldwide through its native token with $100 nominal value ($75 during Pre Sale). Each token represents a stake in ELEMENTS capital and its value is linked to the performance of underlying investments, best-in-class crypto hedge funds. Unlike typical ICO tokens, ELEMENTS tokens have a real intrinsic value being secured by a USD capital invested in the most profitable crypto hedge funds worldwide. More details at
www.elements.cx or Bitcointalk [ANN] Thread.
