In this short post, I just want to make it very clear why I will be going nowhere near the ‘second chance’ auction of Digitex Futures this week.
In the ICO a few weeks back, tokens were sold for $0.01 (one cent). Somehow, apparently, one large investor was able to secure around 22% of the tokens for around $1.2million.
The guy behind this (who, I have to be honest, I feel less confident in the more I watch his videos) has bought back that large investor’s tokens, and is now offering them in a reverse auction.
The thing with a reverse auction is that the price starts high and, over time, gets lower.
The Digitex boys have doubtless done this because their initial offering sold out in 17 minutes, and they doubtless feel they could have made more money. A lot more money.
Their ICO raised around five million dollars – it would have been seven million but for the ETH price dropping back.
If there’s a feeding frenzy this time, and the tokens sell out within an hour, they will cost 25c each. Which is 25x what they cost a few weeks ago. Which is patently ridiculous.
There’s a good chance that when these tokens become available on the exchanges that they will go to five or six cents. If you bought at a cent, you’re in clover. If you buy at a quarter, you’re in shit.
The first ICO brought in five million; the Digitex boys have a good chance of bringing in $25 million from this reverse auction. But they shouldn’t be doing this. In my opinion. It stinks. In my opinion.
Here’s the video which explains how the reverse auction works:
The one proviso to this is if the reverse auction is still running 24 hours after it starts, when tokens will be available for one cent again.
I believe there are enough mugs around who will buy these tokens at a huge multiple of even the most ambitious early valuation for the thing to sell out in a couple or three hours at most. They were great value when first offered in the ICO. They are likely to be desperate value in this week’s reverse auction.
Don’t be one of the mugs. As soon as the tokens are available on an exchange, you’ll be able to buy them at a few cents.
It WILL be interesting to see what happens with this. But it WILL NOT be something to get involved in unless there are still tokens available 24 hours after launch (which is on 15th February).