The world’s largest crypto exchange, Binance, is facing a sobering reality check. A recent analysis by pseudonymous researcher Flow reveals that over 80% of tokens listed on the platform in the past six months have hemorrhaged value since their debut. This paints a concerning picture for investors chasing the next big cryptocurrency moonshot.
Out of 31 tokens scrutinized, a mere five managed to stay afloat – Memecoin (MEME), Ordi (ORDI), the Solana-based Jupiter (JUP) token, Jito (JTO), and the curiously named Dogwifhat (WIF). This data, highlighted in Flow’s May 17th post, underscores the current market’s unforgiving nature.
While the broader cryptocurrency market is experiencing a period of relative calm, according to intergovernmental blockchain expert Anndy Lian, specific altcoins are exhibiting individual trends. Lian, author of “NFT: From Zero to Hero,” acknowledges the lack of overall momentum but suggests a long-term perspective for some Binance listings.
“Tokens launching on Binance are not investment vehicles anymore – all their upside potential is already taken away. Instead, they represent exit liquidity for insiders who capitalize on retail lack of access to quality early investment opportunities,” said Lian.
However, a major red flag emerges when considering the average fully diluted valuation (FDV) of these new tokens – a staggering $4.2 billion – despite lacking a substantial user base. This inflated valuation, as Flow points out, significantly restricts their potential upside.
Binance Listings as Exit Liquidity
Flow raises a critical question: are these token listings primarily vehicles for early investors to cash out? Flow asserts, “these Binance launches aren’t investment opportunities anymore. Their potential for growth has already been squeezed dry.” Instead, they might be serving as “exit liquidity,” allowing insiders to capitalize on retail investors’ limited access to promising early-stage ventures.
Surprisingly, the most impressive performer wasn’t backed by venture capital. Ordi, the aforementioned outlier, skyrocketed over 261% since its launch. Dogwifhat, the memecoin with an eyebrow-raising name, followed closely with a price increase exceeding 117%.
Lian credits the memecoin rush mainly to the attention of regular investors. These coins, he claims, are capable of functioning autonomously in the altcoin market. According to Lian, some people hold these currencies for years to come. This makes it increasingly certain that these small investors invest in MEME and WIF coins. In reality, memecoins dominate Binance, with six being the most traded coins on the platform.
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