Elon Musk's OpenAI ICO Support Reveals 2018 Crypto Market Structure Flaws

VADODARA, January 17, 2026 — According to documents obtained by CoinDesk, Elon Musk briefly supported a plan for OpenAI to raise $10 billion through an initial coin offering (ICO) in January 2018 before withdrawing his backing and resigning from the board. This daily crypto analysis examines the market structure implications of this revelation, highlighting the regulatory gaps and liquidity dynamics that defined the 2018 ICO era. Market structure suggests this event was a classic liquidity grab during a period of high investor demand and regulatory uncertainty.

Market Context & Background

The 2017-2018 ICO boom represented a significant Fair Value Gap (FVG) in crypto fundraising, driven by minimal regulatory oversight and speculative capital inflows. According to the U.S. Securities and Exchange Commission (SEC), many ICOs during this period operated in a regulatory gray area, leading to subsequent enforcement actions. The OpenAI proposal emerged at the peak of this cycle, coinciding with Ethereum's dominance as the primary platform for token issuance. Historical cycles suggest such events often precede market corrections, as seen in the 2018 bear market that followed the ICO bubble. Related developments include the recent sentencing of an AI crypto fraud group, underscoring persistent risks in AI-crypto intersections.

What Happened?

In January 2018, Elon Musk agreed to a proposal for OpenAI to conduct a $10 billion ICO, as detailed in early discussions between Musk and OpenAI's founders. According to CoinDesk, Musk later withdrew his support and resigned from the OpenAI board to focus on artificial intelligence work at Tesla. The media outlet noted that ICOs were a popular fundraising method during 2017-2018, fueled by regulatory uncertainty and high investor demand, before the market cooled amid tighter regulations. This timeline aligns with the peak of Ethereum's network congestion and rising gas fees, which created operational inefficiencies for large-scale token sales.

Technical Analysis & Price Action

Market structure indicates the 2018 ICO boom created a massive Order Block around Ethereum's price action, with significant liquidity pools forming between $1,200 and $1,400. The subsequent bear market invalidated these levels, leading to a prolonged downtrend. Current technical analysis shows Ethereum testing key Fibonacci support at $3,150, a level derived from the 0.618 retracement of the 2023-2025 rally. The Relative Strength Index (RSI) on weekly charts sits at 52, suggesting neutral momentum, while the 50-day moving average at $3,320 acts as immediate resistance. Bullish invalidation is set at $3,000, where a break below would signal renewed bearish pressure. Bearish invalidation lies at $3,500, a level that must be reclaimed for upward momentum to resume.

By The Numbers

Why It Matters

This revelation matters institutionally as it highlights the regulatory arbitrage that characterized early crypto markets, with implications for current AI-token projects seeking compliance. According to Ethereum.org's documentation on token standards, the ERC-20 protocol enabled the ICO boom but lacked built-in regulatory safeguards. For retail investors, it the risks of hype-driven fundraising, where celebrity endorsements can create temporary liquidity grabs without sustainable fundamentals. The convergence of AI and crypto remains a high-risk sector, as seen in recent market volatility around AI-related tokens.

Community Sentiment

Market analysts on X/Twitter express skepticism, noting that Musk's withdrawal suggests internal concerns about the ICO's viability. One quant trader posted, "The Volume Profile from 2018 shows massive distribution above $1,400—Musk's exit was a leading indicator." Others highlight the regulatory timeline, pointing to the SEC's subsequent crackdown on unregistered securities offerings as a critical inflection point. Sentiment remains divided, with bulls arguing this historical context is irrelevant to current AI-crypto innovations, while bears see it as a cautionary tale for overleveraged narratives.

Price Prediction / Future Outlook

Bullish Case: If Ethereum holds Fibonacci support at $3,150 and breaks above the 50-day MA at $3,320, a retest of the yearly high at $3,800 is plausible. This scenario requires sustained on-chain activity and positive regulatory developments for AI tokens. Market structure suggests a Gamma Squeeze could occur if institutional inflows resume, similar to patterns observed in early 2024.

Bearish Case: A break below $3,000 would invalidate the bullish structure, potentially triggering a drop to the next support zone at $2,850. This could be driven by broader market outflows, as seen in the recent $394.7M net outflow from Bitcoin spot ETFs, spilling over into altcoins. Increased regulatory scrutiny on AI-crypto projects may further pressure prices, replicating the 2018 downturn.