Despite the overall market slump, five tokens, including MEME and ORDI, maintained their value amidst a challenging environment
Binance, the world’s leading crypto exchange in terms of trading volume, is encountering a significant challenge. A recent study by crypto researcher Flow indicates that more than 80% of tokens added to the platform in the last six months have significantly decreased in value since their initial offering.
Photo: Flow
According to Flow, out of 31 tokens examined, only five managed to maintain their value. These five tokens are Memecoin (MEME), Ordi (ORDI), The Jupiter (JUP) token Solana-based Jito (JTO), and the uniquely named Dogwifhat (WIF).
New Binance Tokens’ Valuation Overshoots
Anndy Lian, a blockchain expert and author, interprets this bloodbath as a symptom of a challenging market environment. While specific altcoins continue to buck the trend, the overall crypto market lacks the explosive momentum witnessed during previous bull runs. Lian emphasizes that some Binance-listed projects might experience delayed growth, unlike the instant surges seen in the past.
However, a more concerning pattern emerges. These new tokens boast an average fully diluted valuation (FDV) exceeding a staggering $4.2 billion – despite lacking a substantial user base. This inflated valuation significantly restricts their potential for future growth, according to Flow.
“More often than not, tokens launching on Binance are not investment vehicles anymore,” argues Flow. “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.”
Meme Coins’ Retail-Led Surge
According to Lian, retail investor enthusiasm is the lifeblood of meme coins, allowing them to operate somewhat independently of the broader altcoin market.
“Since some of them are long-term hodl, many of the retail investors swarmed to meme coin. You can see that from the performance of MEME and WIF. In fact, if you looked the the trading volume. Six of the top trading coins are memes,” said Lian.
Interestingly, Ordi, a token devoid of venture capital backing, emerged as the most profitable, surging over 260% since launch. Dogwifhat, the controversial meme coin, followed closely with a price increase exceeding 117%.
While meme coins might offer a temporary escape from the market doldrums, the Binance token bloodbath serves as a stark reminder for investors to exercise caution. Exorbitant valuations coupled with a lack of established user bases make many new listings risky bets.
next