Recent reports have shown that after about three weeks since the much anticipated start of an Alternative Trading System (ATS) for security tokens by Overstock.com, there haven’t been a lot of transactions with the platform. The system’s own tZERO Preferred (TZROP) has had its daily volume, oscillating between 7,000 and 23,000 units.
On its own, the number might seem average but when compared to the 26 million TZROP allotted at the $134 million security token offering (STO), then the number is really nothing. Maybe only a minute portion at best.
More about tZERO Transactions
According to reports, about a thousand different investors were authorised for the initial sale but only a small percentage of these investors were involved and committed on the platform at the time it kicked off.
Information also has it that users who were not a part of the initial security token offering and only joined after the kick off, constitute about 15 percent of the company’s current pool of traders. This was revealed by the CEO of the tZERO Group, Saum Noursalehi.
Even though during the STO, TZROP was priced at $10, it was $8 on the 28th of January as trading commenced but later dropped to a price of about $3. The price fluctuations seemed to continue to the point where dealers were transacting at $1 before it recently went up to $3.
A lot of traders seemed to use this as a chance to sell off a good percentage of their tokens and later re-purchase them at a reduced price.
Possible Explanation for the Sales Squeeze
Some traders insist that the sales situation happened like that because of the first investors who invested into the token at the initial coin offering (ICO).
They went ahead with this without really digesting the actual environment surrounding the token and were only consumed with the idea of making a substantial turnover. Mark Nelson, one of the traders, said:
“From discussions with other TZROP holders, many of them don’t really understand what tZERO is and what type of investment they were making, they clearly did not read the offering details and just jumped in on hype from the general ICO craze expecting to double their investment in short order — unrealistic expectations.”
He also said that “those investors and others who likely lost their shirts in the last 6 months on crypto and maybe even traditional market investments and the ones selling now.”
Processing Delays
A few procedural setbacks have also been noted. For example, there have been complaints that verification and authorisation of accounts by Dinosaur Financial – a broker/dealer – takes a week to be completed. It’s also been noted that transactions involving transference of both fiat and token to regular brokerage platforms, always takes more than a few days.
One customer, Andrew Marks, has said that it takes longer than usual to receive cash from token sales. He said:
“I haven’t withdrawn cash yet, but I did sell some shares. It took one day for the sale proceeds to appear in my Dino account,” he explained. “I sold shares on Wednesday and the cash appeared Thursday. I was expecting cash to appear instantly — let’s just say I would expect to see my available cash in my Dino account immediately after the sale.”
The Future of tZERO
Regardless of all the issues, Saum Noursalehi has said that there is an expectation for more transactions and for the average price of tokens to increase by the time retail investors are finally allowed to trade. Mark Nelson also said that
“I do expect the value to only be depressed for a short period of time and recover fully and even be above $10 prior to August opening of trading for all investors.”
Bitcoin (BTC), Ethereum (ETH), XRP (Ripple), and BCH Price Analysis Watch (Feb 15th)
