An analysis of Binance listings over the past six months reveals that high fully diluted valuations often lead to token value loss, adversely affecting regular investors while benefiting insiders.
VC-Backed Tokens on Binance Struggle to Maintain Value Amid High FDVs
Tokens offered on Binance previously fueled long-term bullish rallies for a variety of tokens in 2017 and 2021. However, things have altered dramatically as the makeup of early investors switched toward VCs and various funds that employ retail investors for exit liquidity.
Everyone is talking about the VC + CEX cartel, which encourages firms to launch at the highest fully diluted value (FDV) feasible on tier-1 controlled exchanges in order to offer exit liquidity for VCs and insiders. As a result, new coins are no longer a good investment. But how credible is this claim? The numbers suggest it is.
Flow, known on X as @tradetheflow_, examined the performance of 31 tokens listed on Binance over the last six months. Only five tokens have gained in price since their listing: ORDI +261.9%, JTO +62%, JUP +58%, and WIF +117%. NFP, PORTAL, AEVO, SAGA, DYM, AXL, BOME, and W all had significant declines. Binance listed these tokens with an average FDV of up to $4.2 billion.
The majority of the new Binance listings are tokens backed by tier-1 VCs and launched at exorbitant values. The average FDV on Binance listing dates exceeds $4.2 billion, with some reaching a whopping $11 billion. Often, these projects lack a real user base or robust community support. If you owned a portfolio that invested the same amount in each new Binance listing, you would have lost more than 18% in the last six months.
High FDV Launches on Binance Drain Token Value, Benefiting Insiders Over Regular Investors
Most coins that launch on Binance are no longer viable investment vehicles because their upside potential has already been exhausted. Instead, they represent exit liquidity for insiders who take advantage of regular investors' inability to access high-quality early-stage investment possibilities.
Launching at high FDVs simply results in token price bleed and minimal mindshare, eventually resulting to the token's demise.
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