On May 22, 2024, a large discussion initiated by CoinEx on X (CoinEx Global) titled "Ethereum ETF vs High FDV Dilemma: What is the future market direction?" attracted the attention of cryptocurrency investors. and quickly spread among some communities. Due to recent related topics such as "Ethereum ETF", "High FDV Dilemma", "High Market Value and Low Circulation" and "VC Projects" in the field of cryptocurrency have been highly concerned and discussed by the majority of investors, as of the time of publication, the attention of this incident has Still fermenting.

In a discussion led by CoinEx, panelists agreed that the market has high expectations for the approval of an Ethereum ETF, but none are sure when it will be approved, whether tomorrow or in the near term.

WoShy @bc1qWorkShy believes that the recent surge in the price of Ethereum cites this expectation, adding that every SEC decision on crypto assets in history has had a significant impact on the long-term price of cryptocurrencies.

VIP3 @web3vip said that former U.S. President Trump’s recognition of cryptocurrency is a support for the cryptocurrency market, and the impact on the price of Ethereum and even other cryptocurrencies may double in the future.

About high FDV: Questions and discussions

FDV, that is (Fully Diluted Valuation). Refers to the fully diluted value of the token, which is the market value obtained by multiplying the current currency price by the circulating volume. During the industry's rising cycle, most investors will regard high FDV as an important investment consideration. Among the many voices of discussion, a major point of disagreement is that some people believe that because the current circulation of most VC projects is only one-tenth or even lower of the total circulation, the fully diluted valuation of the token has become a bubble. In the short term, High FDV has no actual reference value. Investors who rely on high FDV as a consideration for investment decisions will only stumble. This is undoubtedly a major investment trap for new investors.

The opposing side believes that this is entirely determined by the market's supply and demand relationship and cannot be considered intervention. In particular, the downturn in the market some time ago exposed the phenomenon of a series of VC projects being cut in half. The root cause is insufficient liquidity in the industry. Moreover, industrial development tends to be more professional, and the logic and standards of "two-price discovery" (price and value discovery) related to investment exploration are also changing. We cannot simply blame the problem on the high FDV of the project with a fixed thinking and perspective. .

It is true that for the encryption industry to develop well, increment is a necessary consideration. Thanks to the unremitting efforts of many evangelists and pioneers inside and outside the industry, the BTC ETF was successfully passed, bringing continuous growth to the industry and pushing the overall market value of global cryptocurrency to $2.6T, of which the market value of Bitcoin is 1.37T. , ranked ninth globally by assets (according to companiesmarketcap.com). The subsequent adoption of the Ethereum ETF will inevitably lead to more increments - not just incremental funds, but also incremental investors/users. So, how to avoid the trap of high FDV has become a strong appeal of many new investors and even some industry veterans.

To avoid the dilemma of high FDV, exchange project selection is the key

There is no doubt that ETFs will inevitably lead to the entry of incremental users and funds, and the "high FDV dilemma" will eventually lead to a reduction in the stock, with one increase and one decrease, which is not conducive to the normalization, scale, and sustainability of the cryptocurrency industry in the long run. development trend. To solve the high FDV dilemma, we need to understand why VC projects tend to have a "low circulation, high valuation" setting: because under the given market demand, due to the scarcity of market liquidity in the short term, project tokens are relatively low The circulation volume is more conducive to the setting of token prices. We have to talk about three roles here: exchange, new users, and VC. We know that professional traders/investors have their own complete investment philosophy and are naturally excluded from this topic. The VC's "low circulation, high FDV" setting for the project token is mainly to have higher pricing power at the beginning of the token's launch so as to better achieve the goal of increasing FDV. Therefore, the key role that can truly solve the "high FDV dilemma" of new users can only be the exchange.

As a world-leading crypto-asset trading platform committed to making cryptocurrency transactions easier, CoinEx believes that only by continuously focusing on polishing products and services, improving user experience, insisting on continuously launching high-quality assets for users, and meeting users’ diversified investment needs, Only in this way can we serve more crypto asset users. In this process, project selection is a key, and exchanges must play their full role in order to avoid the "high FDV dilemma" for more investors. CoinEx has been continuously optimizing the project selection criteria, gradually forming a set of currency listing mechanisms based on "good, fast, and comprehensive", and focuses on discovering and paying attention to innovative high-quality projects with low valuations and high growth, and has received extensive investment. investors (especially new investors).

As guest TMJ said at the X Space event hosted by CoinEx:

The value of all good projects will eventually be discovered, they just take time.

Let’s wait and see what the future of the crypto-asset industry will look like together.

About CoinEx

Founded in December 2017, CoinEx has always adhered to the brand concept of "user first" and provides a variety of products and services such as currency trading, perpetual contracts, margin trading, pledged currency borrowing and strategic trading. With its user-driven market orientation, rich and diversified product functions and excellence in product services, CoinEx has become an exchange that supports 1,000+ currencies, 1,500+ trading pairs, and serves more than 5 million users in more than 200 countries and regions around the world. They provide simple, intuitive, professional and stable crypto asset trading services to protect their crypto journey.

The content of this article is officially provided and does not represent the position or investment advice of this site. Readers must make their own prudent assessments.

This article CoinEx: Exchanges must fully play their role to enable users to avoid the "FDV dilemma" first appeared in Zombit.