Tokens with a low initial circulating supply compared to their fully diluted value (FDV) ratios are posing a significant threat to the crypto market, according to a new report by Binance experts.
Binance’s latest analysis of tokens launched in 2024 reveals that the initial circulating supply to FDV ratio is the lowest it has been in years. This trend suggests a potentially high selling pressure that could negatively affect the crypto market.
Despite this, the number of tokens issued since the beginning of 2024 is already nearing the total for 2023. Binance analysts note that more projects are being launched with high FDV, driven by a low initial circulating supply.
To maintain current token prices, a capitalization to FDV ratio of 12.3% would require approximately $80 billion in financial support. Experts believe that this support is necessary to balance the demand and mitigate selling pressure.
Low Circulating Supply Fuels Initial Price Surges
The primary reason for this trend is the low volume of circulating supply at the time of token launch. With consistent demand, a limited circulating supply can drive up prices during the initial stages of a project’s launch.
This practice has altered market dynamics, increasing selling pressure. According to the report, tokens valued at $155 billion are expected to be unlocked by 2030. Therefore, monitoring the schedules for releasing new asset volumes into the market is crucial.
The Role of Meme Coins in the Market
The report also highlights the role of meme coins in the current market. Experts suggest that the demand for meme coins has contributed to this trend. Some investors view meme coins as a counter to large projects launched with institutional investor participation.
Meme coins have become a significant part of the crypto landscape. Analysts at Franklin Templeton note that these assets have gained popularity due to traders’ desire for quick profits with low transaction fees.
Despite overall market dynamics, the excitement around meme coins remains strong. These tokens continue to show significant growth, with the market capitalization of meme coins exceeding $58 billion.
Summary Review: The surge of tokens with low initial circulating supply and high fully diluted values presents substantial risks to the crypto market. This trend is altering market dynamics and increasing selling pressure, necessitating careful monitoring and substantial financial support to maintain price stability. Additionally, the rising popularity of meme coins reflects a shift in investor behavior, highlighting the diverse and evolving nature of the crypto market.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
