Dragonfly Capital’s Haseeb Qureshi has questioned the common theories regarding recent price drops of tokens listed on Binance, suggesting that market fluctuations are more complex than they appear.
The decline in prices of tokens listed on Binance over the past six months may not be due to venture capital (VC) dumping, but rather a result of more intricate market dynamics, according to Dragonfly Capital managing partner Haseeb Qureshi.
In a May 19 article on X, Qureshi responded to data shared by @tradetheflow_, which showed that tokens with high fully diluted valuations (FDV) but low circulating supply have seen significant price drops despite initial optimism.
These tokens, characterized by large potential valuations but limited supply at launch, have sparked theories about market manipulation.
Some speculate that venture capitalists (VCs) and Key Opinion Leaders (KOLs) are dumping tokens on retail investors, that retail interest is shifting towards memecoins, and that limited supply hinders effective price discovery.
However, Qureshi challenges these ideas, stating that “every top-tier VC has at least a 1-year cliff and a multi-year vesting period before they can access their tokens.”
“So here’s why this story doesn’t make sense: every single one of these tokens is less than a year from TGE, meaning VCs with 1-year cliffs are still locked!”
Haseeb Qureshi
Qureshi, clarifying that his views are personal and not representative of Dragonfly Capital, offered an alternative explanation. He pointed out that the stability of these tokens remained until mid-April, when a broader market downturn occurred, partly due to geopolitical tensions in the Middle East.
“So what is the best explanation of why these coins are still down? My explanation: these new projects have all been mentally basketed as ‘risky new coins.’ Appetite for the ‘risky new coins basket’ went down in April, and didn’t recover. The market decided they didn’t want to buy them back.”
Haseeb Qureshi
He also addressed the idea that retail traders are selling their tokens to invest in memecoins, calling this theory baseless: “Memecoin mania was in full swing by March, but the basket dumped in April, a month and a half later.”
In a May 17 post on X, a crypto researcher at SwissBorg known as @tradetheflow_ revealed that 80% of tokens listed on Binance in the past six months have lost value since their listing. The researcher noted that most of these declining tokens were backed by major venture capital firms such as Coinbase Ventures, Pantera Capital, Paradigm, and Dragonfly.
Only two memecoins and one token not backed by any major VC firm have shown positive returns since their listing. This underscores the need for more transparent and robust mechanisms in token listings.
Summary Review: Haseeb Qureshi of Dragonfly Capital challenges the popular belief that recent declines in Binance-listed tokens are due to VC dumping. Instead, he suggests that the drops are part of a broader market trend where these new tokens are perceived as risky investments. This perception intensified in April amidst wider market downturns, not necessarily due to retail shifts toward memecoins or VC sell-offs. Qureshi’s insights call for a deeper understanding of market dynamics and caution against oversimplified explanations. As the crypto market continues to evolve, the need for transparency and robust mechanisms in token listings remains crucial to ensure investor confidence and market stability.
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.
