- Over 80% of tokens listed on Binance in the past six months have declined in value, raising questions about the influence of VCs and CEXs on token valuations.
- Exceptions exist, suggesting that tokens without major VC backing or linked to strong market trends like Solana may perform differently.
Following a critical update from CNF on Binance’s BNB Beacon Chain usage, a disturbing pattern in token listings on the exchange has been highlighted. An analysis of the past six months shows that over 80% of tokens listed on Binance have seen a decrease in value since their initial listing. This trend casts doubt not only on the high valuations often assigned at launch but also questions the long-term sustainability of these tokens.
Impact of VC and Insider Influence
The tweet mentioned highlights a significant concern in the cryptocurrency space about the influence of venture capitalists (VCs) and centralized exchanges (CEXs) on the launch and initial pricing of new tokens. Certain tokens, such as $MEME and $WIF (meme coins), and $ORDI (lacking tier-1 VC backing), have defied this downward trend.
This may be due to differing market dynamics or the absence of heavy VC influence. Such cases underscore a pattern where VCs and insiders might benefit from high initial valuations, potentially at the expense of regular investors, thereby reducing the attractiveness of new coins as viable investment opportunities.
This situation underscores a pattern where VCs and insiders might gain from high initial valuations, potentially to the detriment of regular investors, thereby reducing the attractiveness of new coins as viable investment opportunities.
While the declining value of these tokens paints a concerning picture, it’s crucial to consider several factors:
- Market Dynamics: The cryptocurrency market is affected by a multitude of factors, including regulatory changes, technological developments, and overall market sentiment, all of which can profoundly impact a token’s performance after listing.
- Research and Due Diligence: Investors are urged to undertake thorough research and understand the fundamentals, the credibility of the teams behind the tokens, and their economic models before making investments.
- Sample and Selection Bias: The analysis is focused only on tokens listed on Binance, which might not represent the entire market. The performance of a few tokens, like those without significant VC backing or those benefiting from strong market trends (e.g., Solana), might be exceptions rather than indicative of a general trend.
These findings advocate a cautious approach to investing in newly listed tokens on Binance, emphasizing the necessity for more comprehensive studies across various exchanges to better understand these patterns. Despite Binance’s prominence as a leading exchange with tokens like BNB trading at $574.44, down slightly by 0.81% in the last day and 3.65% over the past week, the broader implications of these listing dynamics merit careful scrutiny by investors and market analysts alike. As we navigate these uncharted waters, the potential for both success and pitfalls requires that stakeholders remain vigilant and informed.
