In a report released on Wednesday (3rd), cryptocurrency data platform CoinMarketCap analyzed the performance of new tokens listed on four major exchanges in 2024 to understand the current market environment and trends. Its analysis pointed out that the overall performance of new tokens listed on exchanges such as Binance, OKX, Bybit and Bitget this year has been poor, and more than half of the new tokens have experienced negative returns since their initial listing.

Data compiled by CoinMarketCap also shows the differences in listing performance among the four exchanges. As of June 25, Binance, OKX, Bybit and Bitget have listed 30, 33, 132 and 313 new tokens respectively this year. The proportion of new tokens with negative return on investment accounted for 50% and 63.64 respectively. %, 71.97%, 80.19%.

Source: CoinMarketCap

The CoinMarketCap research team believes that one of the reasons for such disparity in listing performance between exchanges is their different listing strategies. For example, Bitget and Bybit have the largest number of tokens listed this year. The types of these new tokens are concentrated in memecoins and related tracks. The CMC report believes that the purpose of this strategy is to "actively cater to the market's demand for high-volatility tokens this year." "The need", although timely, also has shortcomings. Many tokens have shown negative returns after the boom.

Binance has adopted another strategy. Only listing about 30 new tokens this year may be "to take a more cautious approach to conduct thorough due diligence before listing projects." Even so, Binance is not immune to overall market conditions. Despite the downturn, about half of new tokens currently have a negative return on investment (ROI).

Altcoins underperform Bitcoin

The CoinMarketCap report also noted weakness in the overall altcoin market. Data shows that altcoins excluding Ethereum (ETH) are down 17% relative to Bitcoin (BTC) since the start of 2024. The TOTAL3/BTC ratio calculated by CoinMarketCap (which compares BTC to the total market capitalization of the top 125 cryptocurrencies (excluding BTC and ETH)) also reflects this trend.

Source: CMC Research

The report points to several reasons for altcoin underperformance, including how this bull run differs from previous market cycles. Researchers said that the current bullish sentiment is mainly driven by ETFs and institutional assets. More than 70 Bitcoin spot ETFs around the world have attracted more than $28 billion in new capital inflows, driving the price of Bitcoin to rise and hit a record high. However, the same situation has not Not reflected in the altcoin market. The CMC report reads:

"This small bull market seems to be driven by institutions and only helps mainstream currencies. In addition to Memecoin, ETH, SOL, TON and BNB lead the mainstream currency track and become the best-performing large-market capitalization currencies."

Source: CMC Research High FDV and Low Liquidity of New Tokens

In addition, the report mentioned that high fully diluted valuation (FDV), low circulating supply and limited liquidity are common problems faced by new projects:

“This high FDV/low liquidity combination increases retail investor skepticism and perceptions of overvaluation, making it difficult for these projects to continue to gain investor confidence and maintain price stability.”

The CoinMarketCap research team observed that in this cycle, retail investors seem to be "no longer willing to be the blood bag of major VCs withdrawing their liquidity, and they are no longer actively participating in projects endorsed by these large institutions" because these investment groups have found that relevant Projects are often overvalued when they are launched. In the past, following the trend of VCs did not allow them to get corresponding rewards, so they turned to the meme currency track. The report pointed out that retail investors "bet on some low-valuation projects in the 'cultural casino' in order to make profits. This ultimately resulted in a situation where VCs and retail investors did not accept each other's orders."

Although the performance of altcoins is worrying, the CoinMarketCap research team believes that current market conditions will also provide investment opportunities for high-potential projects. The report refers to market performance in June 2020, when the Bitcoin dominance index was as high as 65%, but fell below 38% at the peak of the bull market in 2021, ushering in the altcoin season. The report believes that there are still some potential opportunities in the market that can trigger the altcoin season, including the supply shock after the Bitcoin halving, the U.S. Federal Reserve’s interest rate cut, and the U.S. presidential candidate’s support for the encryption industry.

CMC Altcoin Seasonal Index (Source: CMC Research, statistics as of June 28, 2024)

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