More than 80% of newly listed cryptocurrencies on Binance, the world's largest digital asset exchange by trading volume, have fallen in value.
Over the past six months, these tokens have plummeted in value since being listed on exchanges, causing concern for investors looking for the latest cryptocurrencies.
The newest Binance token listing is trading in red
According to a May 17 post by pseudonymous crypto researcher Flow on JUP), Zito (JTO), Dogwifat (WIF).
Despite the lack of venture capitalist (VC) backing, the Ordi token was the most profitable, increasing over 261% since launch. Controversial meme coin Dogwifhat followed him in second place, soaring over 117%.
Flo pointed out that top venture capitalists backed most of Binance's new listings, launching them at high valuations. The average fully diluted valuation (FDV) on Binance listing date is over $4.2 billion, with some tokens exceeding $11 billion. These projects often lack real users and strong communities.
According to Flo, if investors had invested equally in each of Binance's new listings over the past six months, their portfolios would have declined by more than 18%. This suggests that many tokens launched on Binance are not viable investment vehicles as their upside potential has already been exhausted, Frow added. Rather, it has become exit liquidity for insiders who exploit individual investors' limited access to initial investment opportunities.
Flo also criticized current market dynamics, citing economist Alex Krueger's earlier observations on X. Krueger pointed out that many tokens are designed to pump up and then dump due to short vesting schedules, false metrics, and a focus on hype rather than user acquisition.
New token launch hurts the market
According to cryptocurrency researcher Flo, the current token launch meta is having a negative impact on the crypto market and requires a new approach to token launches. Releasing a token at a high fully diluted valuation (FDV) will minimize value decline and market interest, ultimately causing a token crash. He added that this approach would not only damage the token, but also discredit the entire cryptocurrency industry.
He highlighted a previous post by Crypto_McKenna criticizing the practice of encouraging 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 repricing, which helps generate momentum and interest.
