According to PANews, in recent weeks, there has been much discussion about low circulation/high FDV tokens. The performance of these tokens in the market has been analyzed, with some interesting findings.
The study found that Memecoins performed the best, with their entire supply circulating from day one. Interestingly, both old and new Memecoins showed excellent performance. On the other hand, the worst-performing projects were newer VC projects with a very high 'Not Circulating Supply (NCS)'.
Despite the general trend, there were some outliers. These projects, which launched in January 2024, showed that new projects with a high NCS could still perform well. The reason for their success was attributed to narrative.
Upon closer observation, it was found that while projects with a high NCS often performed poorly, there was no clear distribution pattern among projects with extremely low or high NCS. For instance, quality projects with a low NCS like FXS (NCS 20%), MASK (NCS 4%), and RPL (NCS 0%) had market performances of -44%, -10%, and -22% respectively in the past three months.
However, on a positive note, it was observed that projects with a lower NCS generally performed better, regardless of the project's age. The conclusion drawn was that market conditions and narrative are the main factors determining asset performance. However, high NCS projects often perform poorly and are usually a better choice for hedging or in a bear market.
When comparing low circulation/high FDV projects to high circulation/low FDV projects, the former performed quite poorly, with only two notable exceptions. On the other hand, barring a few Memecoin outliers, high circulation/low FDV projects usually performed better.
In conclusion, while low circulation/high FDV projects often perform poorly, there are a few exceptions. However, finding these exceptions requires a lot of effort and success is not guaranteed. Despite data showing Memecoin's excellent performance in this regard, not everyone may be willing to trade Memecoin. The solution? Become a narrative trader and find the best balance point. Projects with an NCS between 10% and 50% were found to perform the best recently, including FET, FTM, PENDLE, RNDR, AGIX, and AKT.