Exit Liquidity? 80% of Binance’s New Tokens Lost Value Despite Market Rally

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As an experienced analyst, I’ve seen my fair share of market trends come and go. The latest data on Binance’s new listings over the past six months has left me with a sense of caution. Despite a bullish cryptocurrency market during this period, investors who bought into these new tokens are down by an average of 18%.

As a cryptocurrency market analyst, I have examined the performance of tokens listed on Binance within the past six months, even amidst a broader market upturn. Contrary to expectations, investors in these newly-listed cryptocurrencies experienced a loss of over 18% during this period. Surprisingly, approximately 80% of these tokens witnessed value declines post-listing.

Based on Flow’s study as a cryptocurrency researcher, out of the 31 tokens listed on Binance, just five tokens defied the downward trend and experienced growth. These tokens are MEME, ORDI, Jupiter (JUP), Jito (JTO), and Dogwifhat (WIF).

Memecoins have gained value due to the intense trading activity surrounding them in the cryptocurrency market. Notably, WIF and other tokens experienced price increases. On the other hand, ORDI saw a rise without any major venture capital investment, while JUP and JTO benefited from their popularity on the Solana blockchain.

Examining the latest listings on the leading cryptocurrency exchange, Binance, over the past six months reveals that over 80% of the tokens have decreased in value since their listing dates. Notable exceptions include:

— flow (@tradetheflow_) May 17, 2024

According to the analysis, the tokens are being added to Binance with extremely high estimations of value, resulting in an average fully diluted valuation (FDV) surpassing $4.2 billion. However, these tokens don’t have substantial user bases yet, which limits their potential growth potential.

Insiders frequently use these tokens as a means to exit their positions, exploiting the limited access retail investors have to premium investment opportunities.

Put more plainly, the initial creators of these overvalued tokens could reap significant gains, while regular investors might be left with losses once the market corrects itself and prices decrease, effectively erasing any future profitability for them.

The majority of new tokens listed on Binance are backed by top-tier venture capital firms and debut at inflated valuations. On average, their fully diluted valuations exceed $4.2 billion upon listing, with some reaching ludicrous figures above $11 billion. However, many of these projects lack substantial user bases or a strong community following.

— flow (@tradetheflow_) May 17, 2024

As a researcher studying memecoins, I’ve observed an intriguing development: PEPE and other memecoins have reached new all-time highs following a surge in interest spurred by the meme stock trading craze. This renewed excitement stems from the return of a pivotal figure in the 2021 market, Keith Gill. Known as RoaringKitty on X and DFV on Reddit, Gill came out of a three-year social media hiatus after testifying before Congress.

As an analyst, I’ve noticed an intriguing development regarding GameStop (NYSE: GME). The value of the trader’s position significantly increased, instigating a dramatic price surge for this video game retailer. This phenomenon was fueled by a groundswell of retail traders, resulting in extensive media coverage. Two years prior, a similar occurrence took place, causing a remarkable stock price rally that garnered significant attention. The aftermath included a Netflix series, a movie production, and intensive financial scrutiny.

The cryptocurrency market saw increases in memecoins following this move, as observed by several analysts who noted that DOGE experienced a surge similar to the meme stock frenzy of 2021.

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2024-05-18 05:23