Why do most Crypto Projects fail after fundraising?

Why do most Crypto Projects fail after fundraising?

Obtaining funding to launch new Crypto Projects has always posed a challenge for investors, including those who have brilliant company concepts, because the standard fundraising method needs substantially extra energy, attention, and funds.

Cryptocurrency fundraising is a viable option for blockchain-related projects. Currently, there are approximately 20,000 cryptocurrencies in circulation. Approximately 2,000 cryptocurrency projects are reported to have failed. It’s due to several factors, including:

·        a lack of quality fund-raising at the beginning and after startup

·        an inability to grow

·        a handful of obvious scams

·       inability to develop marketing strategies

·       traction decrease

·       personal issues confronting the developers

 Several of the failures occurred in the  2017 to 2018 initial coin offering frenzy.

We would now look at why Crypto projects fail after fundraising.

1. Absence of Application

A cryptocurrency can be used for a variety of purposes. The majority of participants seem to be primarily acquainted with “store-of-value” cryptocurrencies like Bitcoin. However, many currencies and tokens offer extra applications.

2. Stability is lacking.

The bitcoin market is extremely vulnerable to a variety of causes that could lead to a crash. If you’re interested in cryptocurrency, you’ve certainly experienced that the price of a currency or token can change on several occasions every day.

The price of cryptocurrency projects after fundraising is primarily determined by the market forces. The price of a coin would generally fall if the supply surpasses the demand. However, should demand outweigh supply, the price is likely to increase.

3. A Crowded Market.

Expansion is one of the main reasons for the failure of so numerous cryptocurrency projects. Even though the cryptocurrency marketplace is still in its infancy, it is already flooded with aspiring inventors and innovators. This has resulted in an excessive number of accessible currencies and tokens, making it extremely difficult to make a mark.

4. Weak Ecosystem:

Some cryptocurrency projects focus just on establishing a coin and marketing it, rather than creating a network that values their objective.

5. Rug Pull:

When a group’s creator discards a project, the funds are immediately forfeited. It is a forgery.

6. Inactive Development:

This is something that many failed cryptocurrencies have in the connection. Several projects are abandoned by entrepreneurs, who do not endeavor to retain them up with the market conditions.

7. Safety flaws.

Safety flaws can potentially contribute to the failure of cryptocurrency projects. When a coin’s safety is weak, it’s possible to take it down, from phishing to constructing fraudulent networks.

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