As an analyst with experience in the cryptocurrency market, I find the current trend of new token listings on Binance concerning. According to recent data, over 80% of these newly listed tokens have declined in value since their listing on the exchange. This is a red flag for investors seeking out the latest and greatest cryptocurrencies.
As a crypto investor, I’ve noticed that more than 80% of the recently added cryptocurrencies on Binance, the leading global digital asset exchange by trading volume, have experienced a decrease in value.
Over the last six months, the value of these tokens has significantly dropped after they were listed on the exchange, causing apprehension among investors looking for new cryptocurrency opportunities.
Most New Binance Token Listings Trading in Red
Based on a May 17 post by the pseudonymous crypto researcher Flow on platform X, just five out of the 31 tokens examined have experienced price growth: MEME (a meme coin), ORDI (the Ordi token), JUP (based on Solana), JTO (Jito), and WIF (Dogwifhat).
There’s been a lot of buzz lately about the alliance between Venture Capitalists (VC) and Chief Executive Officers (CEX) of major cryptocurrency exchanges. This collaboration reportedly encourages startups to debut with the maximum Funded Development Value (FDV) on top-tier exchanges, while also ensuring sufficient exit liquidity for VC investors and insiders.
The result: New coins are not great investment anymore
But how real is this? I crunched the number for you
— flow (@tradetheflow_) May 17, 2024
As a researcher studying the cryptocurrency market, I discovered that the Ordi token, which didn’t receive venture capitalist (VC) funding, yielded the greatest returns with a remarkable increase of over 261% since its inception. The meme coin Dogwifhat came in second place, experiencing a significant surge of more than 117%.
As a crypto investor, I’ve observed that Binance, one of the leading cryptocurrency exchanges, lists new projects with significant backing from top-tier venture capitalists. Consequently, these tokens debut at inflated valuations. The average fully diluted valuation (FDV) on the listing date hovers above $4.2 billion, and some even surpass $11 billion. However, I’ve found that many of these projects lack substantial user bases or a strong community to back up such high valuations.
As a crypto investor, based on the information provided by Flow, if I had evenly distributed my investments among all the new listings on Binance over the last six months, my portfolio would have experienced a significant loss of more than 18%. According to Flow, this finding implies that several tokens debuting on Binance might not be promising investment options, as their growth potential may already have been tapped out. Instead, these tokens could serve as exit points for insiders who capitalize on retail investors’ restricted access to early investment chances.
Flow raised concerns about the present market trends, drawing attention to economist Alex Kruger’s previous insights on X. According to Kruger, numerous tokens are engineered for inflated prices through manipulative tactics such as short vesting periods, fabricated metrics, and an excessive emphasis on generating hype instead of attracting genuine users.
New Token Launches Causing Market Harm
As a crypto analyst, I’ve come across Flow’s perspective on the current token launch meta and its detrimental impact on the crypto market. Based on his findings, releasing tokens with high, fully diluted valuations (FDVs) can result in value erosion and limited market interest, leading to a significant drop in price. This not only negatively affects the token but also tarnishes the reputation of the entire crypto industry. Instead, it’s essential to explore alternative approaches to token launches that foster sustainable growth and maintain investor confidence.
In his previous post, Crypto_McKenna pointed out the issue of protocols being launched with high Funded Development Versions (FDVs) to favor early investors. McKenna argued instead for a lower FDV at launch, which would provide secondary market traders with opportunities to gain from price adjustments and create buzz and excitement in the market.
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2024-05-18 07:20