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Most tokens listed on Binance will decline within 6 months
Over 80% of tokens listed on Binance, the world’s largest cryptocurrency exchange by trading volume, have lost value since their listing in the last six months.
Cryptocurrency researcher Flow reported that many of Binance’s new listings are tokens backed by top-tier venture capital firms and introduced at high valuations.
Binance’s listing now provides “exit liquidity” for VCs
According to Flow, only 5 of the 31 selected tokens on Binance have seen price increases since their launch. These tokens—ORDERJUP, WIF, JTO and MEME: These are mostly meme coins or projects without major venture capital backing.
In the last six months, these tokens are increased individually by more than 50%. Specifically, ORDI increased by approximately 262%, JTO by 62%, and JUP by 58%. WIF and MEME also posted gains of more than 117% and 8.5%, respectively.
In contrast, tokens backed by major VCs have performed poorly. NFP token by Binance Labs, OMNI backed by Pantera Capital and AEVO, supported by VC including Coinbase, Paradigm and Dragonfly, tumbled about 63%, 52% and 68%, respectively.
“If you had a portfolio where you would invest an equal amount with each new listing on Binance, you would have lost over 18% over the last 6 months,” Flow said.
To know more: What are the best Altcoins to invest in in May 2024?
Performance of the Binance token list. Source: X/TradeTheFlow
Flow highlighted the fact that many of these projects are launching at high fully diluted values (FDV). He said that an average FDV for a Binance listing could exceed $4.2 billion, sometimes reaching up to $11 billion with “no real users or strong community behind” these projects.
Notably, Flow’s finding contrasts sharply with analysis last year by cryptocurrency investor Ren & Heinrich, which found that token prices increased 73% in the first 30 days following their listing on Binance. Ren and Heinrich at the time suggested That The emergence of Binance as a leading global cryptocurrency exchange has paid much more attention to its token listings among industry players.
To know more: Crypto Scam Projects: How to Spot Fake Tokens
Market experts explained that Binance’s dominance and high liquidity made it happen attractive for professionals to abandon their investments in these assets.
“More often than not, tokens launched on Binance are no longer an investment vehicle – all of their upside potential has already been taken away. Instead, they represent exit liquidity for insiders who take advantage of the lack of retail access to opportunities of quality upfront investment,” explained Flow.
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