Over 80% of new crypto assets on Binance have declined in value: data

More than 80% of new cryptocurrencies on Binance, the world’s largest digital asset exchange by trading volume, have declined in value.

In the past six months, these tokens have dropped in value since their listing on the stock exchange, raising concerns for investors looking for the latest cryptocurrencies.

Most of the Binance tokens listed traded in red

According to a May 17 post by pseudonymous crypto researcher Flow on X, only five of the 31 tokens analyzed have appreciated in value: meme coin (MEME), Ordi token (ORDI), Solana-based Jupiter ( JUP), Jito (JTO) and Dogwifhat (WIF).

Everyone is talking about the VC + CEX cartel where teams are pushed to launch the highest possible FDV on Tier 1 CEX and provide exit liquidity for VCs and insiders.

The result: new coins are no longer a great investment

But how real is this? I made the number for you 👇

— flow (@tradetheflow_) May 17, 2024

Despite not having venture capitalist (VC) backing, the Ordi token was the most profitable, rising over 261% since its launch. Controversial meme coin Dogwifhat followed in second place, up more than 117%.

Flow noted that most new listings on Binance are backed by top-tier venture capitalists and launched at inflated valuations. The average fully diluted valuation (FDV) on Binance’s listing date is over $4.2 billion, with some tokens exceeding $11 billion. Often these projects do not have real users or a strong community.

According to Flow, if investors had made equal investments in each of Binance’s new listings over the past six months, their portfolio would have declined by more than 18%. This, Flow adds, suggests that many tokens being launched on Binance are not viable investment vehicles, as their upside potential has already been exhausted. Instead, they are exit liquidity for insiders who exploit retail investors’ limited access to early stage investment opportunities.

Flow also criticized current market dynamics, citing economist Alex Kruger’s earlier observations on X. Kruger noted that many tokens are designed to pump and then dump due to short vesting schedules, bogus metrics and a focus on hype rather than user acquisition.

Launches of new tokens that cause damage to the market

According to crypto researcher Flow, the current token launch meta is harmful to the crypto market and a new approach to token launches is needed. Releasing tokens at high, fully diluted valuations (FDV) leads to value erosion and minimal market interest, ultimately causing the token to plummet. He added that this approach not only harms the token, but also discredits the entire crypto industry.

He highlighted an earlier post by Crypto_McKenna, which criticized the practice of pushing protocols to launch at high FDVs to benefit pre-seed and seed investors. McKenna noted that launching at a lower FDV allows secondary market traders to benefit from the revaluation and helps generate momentum and interest.

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