# CFA Institute talks about the ICO Bubble

http://www.opportunitiesforafricans.com/wp-content/uploads/2017/03/cfa-institute.jpeg

The [CFA Institute](https://www.cfainstitute.org/pages/index.aspx) posted [an article](https://blogs.cfainstitute.org/marketintegrity/2017/07/06/initial-coin-offerings-what-happens-when-a-bubble-cannot-expand/) talking about the [ICO Bubble](https://steemit.com/cryptocurrency/@pedrombraz/ico-bubble). 

The CFA Institute is likely the most reputed institute in Finance Certification and they set global standards on best practices in the financial world.

Basically they state in the document that the reason ICOs are pumping is because there are a lot of people overexposed in Bitcoin, for two main reasons:

# #1 - Cashing out of Bitcoin is Harder

We all know that Bitcoin mining is concentrated in China, and mining farms gave rise to many [whales](https://www.cryptocoinsnews.com/bitcoin-whale/). These whales have large sums of bitcoin and lately the Chinese government [made it harder for people to cash it](https://cointelegraph.com/news/chinese-bitcoin-exchanges-demand-users-to-explain-sources-of-funds) out in fiat currency. 

Now bitcoin exchanges are obliged to follow more strict KYC policy and request deeper information on its users.

In other words, it became practically harder to cut exposure on bitcoin.

# #2 - Bitcoin Pricing in Anticipation to the Scaling Debate

They argue that the current [Scaling Debate](https://steemit.com/bitcoin/@pedrombraz/bitcoin-hardfork-for-dummies) is leveraging bitcoin prices. They say that the scaling debate is the last milestone before bitcoin going mainstream, and as such, many people are trying to acquire exposure on it beforehand.

# Facts

https://tokenmarket.net/blockchain/ethereum/assets/status/logo_big.png

Basically the CFA Institute believes that huge bitcoin holders are "trapped" with bitcoin and are flushing it out on ICOs.

Although their reasoning is quite sound, I can't find many facts to support their statement that whales are the ones buying ICO tokens.

*Au contraire* actually. I've heard several times that the average investment in an ICO is as low as 250 usd. 

On [Corey Petty's blog](https://medium.com/@corpetty) he brings us a close look into several ICOs investors distribution:

[This article](https://medium.com/the-bitcoin-podcast-blog/a-look-at-the-status-im-ico-token-distribution-f5bcf7f00907) about the [Status ICO](https://status.im) shows us that roughly 55% of initial public investors invested less than USD 30k on it.

The articles about the [BAT Token](https://medium.com/the-bitcoin-podcast-blog/a-look-at-the-bat-token-distribution-bb3bcb92748f),  the [Aragon ICO](https://medium.com/blockchannel/a-look-at-the-aragon-ico-investment-distribution-a78f601229d8) and the [Gnosis ICO](https://keepingstock.net/a-look-at-the-gnosis-dutch-auction-distribution-25c2ccac2d9d) show that tokens are more concentrated on investors with USD 300k+ initial investments.

The [CVC Civic ICO](https://www.civic.com) was hard capped on USD 5k per *verified user* (as opposed to address).

All these ICOs raised more than USD 20 million each. Technically we found more evidence supporting the CFA Institute's claims than our own. It is worth noting though, that both Status and Civic ICOs took place more recently than all the others, and it is very likely that Civic has set a new standard concerning ICOs best practices.

# Conclusion

I particularly feel that whoever is trying to cut exposure o bitcoins won't go to ICOs to do so. ICOs are much riskier than handy alternatives such as [Ethereum](https://www.ethereum.org), [Ripple](https://ripple.com) or [Litecoin](https://litecoin.org/). Moreover, stating that the [Scaling Debate](https://steemit.com/bitcoin/@pedrombraz/bitcoin-hardfork-for-dummies) is leveraging prices is highly subjective.

Even though, we found little evidence on whether ICOs are or aren't taken mostly by whales. The evidence we found points towards whales, but I believe things are changing rapidly and our sample is too small to infer a general conclusion. 

We intend on further studying this issue using the methodology proposed by [Corey Petty](https://medium.com/@corpetty) in his articles.