- Binance remains a pivotal player in the cryptocurrency market, often influencing token prices with its listings.
- The recent report by Flow provides a deep dive into the performance of tokens post-listing on Binance.
- “Most tokens launched on Binance no longer serve as investment vehicles. Their upward potential is exhausted, often serving as exit liquidity for insiders,” states the report.
Explore the dynamics of cryptocurrency listings and their impact on token prices with our latest analysis on Binance’s influence.
What Does the Binance Listings Report Reveal?
The latest analysis by cryptocurrency researcher Flow delves into the impact of Binance’s listings. A significant number of these tokens are supported by top-tier venture capital firms and debut with high valuations. The report notes that only 5 out of 31 tokens listed on Binance have maintained their price increases. Tokens like ORDI, JUP, WIF, JTO, and MEME, which did not receive backing from major venture capitals, have shown resilience. Over the past six months, these tokens experienced notable gains, with ORDI rising by approximately 262%, JTO by 62%, JUP by 58%, WIF by 117%, and MEME by 8.5%.
Why Do Venture-Backed Tokens Falter?
Interestingly, cryptocurrencies supported by venture capital firms have underperformed. Notable examples include Binance Labs’ NFP token and Pantera Capital-backed OMNI, along with tokens from renowned projects like Coinbase, Paradigm, and Dragonfly, all of which have seen significant value drops. “If you had evenly invested in each new Binance listing, your portfolio would have decreased by over 18% in the last six months,” the report states. This decline underscores the volatility and risk associated with new token listings on major exchanges.
Key Insights for Investors
Investors should heed these critical takeaways:
- Tokens with high fully diluted valuations (FDVs) and venture capital backing can be risky.
- Many new altcoins may achieve inflated valuations without substantial community support.
- Investors might face extended losses if they hastily invest in newly listed altcoins.
In contrast to last year’s research by Ren & Heinrich, which suggested an average gain of 73% within the first 30 days post-listing, Flow’s latest study suggests a shift in perspective.
Conclusion
This analysis provides a sobering look at the current state of cryptocurrency investments related to exchange listings, particularly on Binance, offering crucial insights for potential investors.
