The Pattern Of CFI Price Movement

The website Cofound.it had the biggest pre-sale of any ICO at its time and earned about $15 million within 60 hours. The site describes itself as a "distributed VC ecosystem" and is essentially a good platform for launching some selected ICOs. In an environment where there is a trust issue with ICOs, some background checks and selection procedures certainly help. So, overall it's a rather good idea and one can see why investors were so enthusiastic about the pre-sale of its coin CFI.

However, since its launch, the prices has more or less stabilized and there is not too much volatility.

The screenshot above is from coinmarketcap.com and we can see how the bitcoin price hasn't varied a lot despite the fact that a few ICOs have been launched by the site so far. So, what's going on here? And can we detect some kind of a pattern in those movements?

To understand that, let's first look at the structure of their ICOs.

The screenshot above is from their ongoing ICO of Digital Assets Power Play. As can be seen, their ICOs are divided in 3 phases:

-Phase 1 is usually a 1 day long pre-sale open only to priority pass holders, but it has a cap on individual purchases.

-Phase 2 is also a 1 day long pre-sale for priority pass holders, but with no cap on individual purchase.

-Finally, Phase 3 is a month long ICO for people with no priority pass.

You can qualify for a priority pass if your Ethereum wallet (such as Mist, Parity, Metamask, MyEtherWallet etc.) contains more than 5000 CFI tokens.

And that is the prime motivation for you to buy CFI. You don't need CFI to buy the tokens of the new ICOs; you'll use Ethereum for that. You primarily need it to enter the pre-sale during phase 1 and phase 2.

Also, during phase 1, higher the amount of CFI you hold, the more tokens you can purchase (For eg. if you have around 5000 CFIs, you'll be allowed to purchase tokens worth up to, say, 4 ETH. The exact amount is usually declared by the team few days before the pre-sale.)

But once you've made the purchase, you're free to sell back your CFI. It's a concern that has been admitted by their team, and they have been trying out various methods to counter that, such as allowing a linear relationship between number of CFIs held and individual cap during the pre-sale.

(Other than that, there are CFI based payments to the platform by the projects that are hosting the ICOs. And there are CFI transactions among the various stake holders of the platform. But these transactions will add to the long term value and won't be much of a factor towards the volatility of the prices.)

So, to repeat the key point: this means that somebody can buy CFI just before the pre-sale and dump it soon afterwards. This is not great for the long term value of the coin, but this does introduce some predictability about price fluctuations.

For eg. we can say that sometime before a pre-sale starts, the prices will go up. And soon after they will go down.

In the graph above, we can see that within 2 days of the start of the Digital Assets Power Play pre-sale, the prices moved from the low of 0.00003300 to 0.00005450. That's about a 65% increase during that time.

Of course, there is no such thing as a guarantee. There are various factors at play. For eg. it matters how popular the ICO is. If it isn't popular, then there will be no major price movement. Then, one has to consider what was the state of the CFI price before the sale started. If it was already high, then there might not be much of a growth. Also, once this pattern becomes more widely known, the profitability of it will decrease.

So, even if you know the general pattern, there is no substitute of your own research.
Hopefully this article will give you a basic idea and help you understand the market better. Any discussion is welcome in the comments. Cheers.

Links used for references:

1. https://cointelegraph.com/news/cofoundit-completes-worlds-biggest-presale-with-15-mln
2. https://blog.cofound.it/cofound-it-token-role-and-value-returns-514a8aeface1
3. https://blog.cofound.it/cofound-it-priority-pass-lessons-learned-and-rewarding-loyalty-in-future-crowdsales-84e01687a51a
4. https://medium.com/maecenas/crowdsale-sale-terms-1ec4f06c9055
5. https://cofound.it/en/projects/digital-assets-power-play/