Forex Traders Are Now Investing In ICOs

Initial Coin Offerings (ICOs) seem to be the rage among Forex traders today. A project called raised around $65 million, while Bancor raised $153 million in just a few hours. MoneyWeek reports that this year, blockchain entrepreneurs raised $327 million through ICO offerings in the first half of 2017 — a figure that now surpasses the $290 million raised via traditional venture capital funding. ICOs are unregulated funds that are raised by new cryptocurrency businesses. It is usually used by cryptocurrency startups to bypass the regulated capital-raising process required by banks or venture capitalists in Silicon Valley. ICOs are usually sold to early backers of the project in exchange for monetary funds or other popular cryptocurrencies such as Bitcoin.Bitcoin

In an article by Nadex it discussed Forex traders are the latest group to join the fray of ICO investors. The survey shows that 20% of active Forex traders are now investing ICOs, with 19% of the respondents saying that they have already included ICOs in their portfolio. Furthermore, about 8.5% of the survey respondents say that while they haven’t invested yet in an ICO, they are interested in it and are looking for one that would suit their needs. The survey had a total of 700 respondents.

Forex Traders Are Now Investing In ICOs

— image credit: Finance Magnates Intelligence

Despite the fact that almost half of the participants say that they don’t trust ICOs, Finance Magnate states that many brokers and institutional players who were cautious with cryptocurrencies before are now praising the investment vehicle. With the above figures, and the rising prices of popular cryptocurrencies, experts suggest that the trend of Forex traders investing in ICOs may continue for the long run.

Forex trading is very different compared to investing in ICOs. In Forex, currencies are traded and priced in pairs, and traders make money from buying low and selling high. ICOs, on the other hand, are virtual investments out of thin air. Unlike Bitcoin, these ICOs are not being supported by thousands of merchants so if their value collapses, the monetary backing that an investor shelled out to a cryptocurrency company may not get an interest, let alone be returned. Trading in Forex is safer because currencies are regulated by banks. Even if a currency’s value depreciates, its value is not completely lost. mentions several reasons why traders may be getting interested with some ICOs. Not all ICOs are created equal, and some have great demand for a cryptocurrency token system. If it makes sense as a business, and it has potential to become big, it’s only natural for investors and even Forex traders to become interested in investing in an ICO.

Investopedia discussed how “Early investors in the operation are usually motivated to buy the cryptocoins in the hope that the plan becomes successful after it launches which could translate to a higher cryptocoin value than what they purchased it for before the project was initiated.”

There is good money to be made by investing in ICOs, and the aforementioned success of both and Bancor is proof of that. However, there are also substantial risks involved in investing in them, and experts advise investors of ICOs to weigh the pros and cons before making any financial decisions.