ICOs are Back, but Some Still Behave like the Old Days

Plasma went for max velocity… and the market behaved exactly as you’d expect when insiders see numbers that look like lottery jackpots.

THE CRYPTO ALARM

NOV 27

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A bit over five months ago, I wrote to you about 

Plasma’s enormous token sale

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A $500 million cap filled in minutes, median deposits the size of a house deposit, and a level of hype we hadn’t seen since $TRUMP and $MELANIA hit the market.

It was indeed a sign that we were on the verge of a new ICO era, a point I covered in detail, and which has been reaffirmed by big token sales since, like Monad.

Well… five (almost six) months down the track now, we have an interesting progress report on Plasma, and it doesn’t make for pretty reading.

Not all ICOs are Equal

Plasma’s XPL token sold during the ICO at a price of just five cents.

When it listed across major exchanges in September, and immediately rocketed to $1.68. That’s a 3,260% gain, the kind of chart that lures retail investors in like a moth to flame.

But today? The token trades over 

87% below that peak, and the volume profile tells the whole story.

Those first two weeks were a frenzy of insider and early-backer distribution, a textbook replay of the 2021 cycle where retail provided the exit liquidity.

Note: around the same time I wrote the piece on Plasma, I also wrote a piece titled, ‘You Are the Exit Liquidity.’ It’s a healthy one to go back and check out from time to time.

Of course, this Plasma XPL drama is in contrast to Coinbase’s Monad (MON) token sale.

Coinbase ran an unusually tight process, a fairer launch, and so far, at least, the MON token has held its ground.

Plasma went for max velocity… and the market behaved exactly as you’d expect when insiders see numbers that look like lottery jackpots.

Be Armed, Not Naive

The Plasma example is an important reminder about ICOs.

I’m convinced we’re heading into a new era of token sales. 2017-style market mayhem, but within far more defined, structured and fairer pathways to market.

The regulatory easing with ‘crypto-friendly’ regulators, the beginnings of U.S. crypto leadership, the explosion of tokenized treasuries and stablecoins, the return of crypto IPOs to the stock market, the Trump-family-self-interest-fuelled mega-projects… all of this points to a reopening of capital markets that will funnel into onchain projects.

But let’s not kid ourselves if the ICO is back, as I expect, ICO dynamics haven’t completely changed.

There will be rogue players and vaporware launches where pumps will be fast and dumps even faster. And remember, the insiders always eat first, and retail becomes exit liquidity.

I do think reputable, regulated and market-leading platforms, like what Coinbase is doing, will be a better way to get involved. But that won’t stop people from seeking out the boiler-room style FOMO launches.

Which brings me to the point too many people learn too late.

When you buy into a token sale (regardless of where and how you get into it), and it doubles in value, typically you have three choices:

Do nothing and hope the rally continues. Maybe it does. Maybe it doesn’t.

Do nothing and watch an 80%, 90%… 100% crash, turning your win to dust.

Pull out your initial investment, de-risk the position, and let the rest free ride.

Only one of those gives you peace of mind. Only one protects you from becoming someone else’s liquidity.

Plasma is not an outlier. It’s the old days of ICO investing.

It’s proof that won’t go away.

But then something like Monad tells us there can be a better way forward.

All I want you to remember is to be vigilant. De-risk early and enjoy the peace of mind. Ride the upside with house money where you can.

And above all… make sure you have the strongest appetite for risk.

Trust in crypto,

Adam Atlantic