2024 Token Listing Performance
As we enter 2024, the cryptocurrency market continues to develop and sees an initial bull run, but this round of market conditions brings new challenges to investors and projects. Referring to the performance of previous cycles, a leading first-tier new project that is backed by major venture capital (VC) and launched in a high-profile manner on a well-known centralized exchange (CEX) will generally perform strongly in a bull market under the support of the positive development of Bitcoin and cryptocurrencies. However, the current market presents different characteristics, and it is obvious that the overall performance of newly listed tokens is poor. More than half of the new tokens listed on the four major exchanges this year have negative returns. The overall altcoin market also shows weakness. Since the beginning of 2024, altcoins (excluding ETH) have fallen by 17% relative to BTC. The TOTA L3/BTC chart compares BTC with the total market value of the top 125 cryptocurrencies (excluding BTC and ETH), which also intuitively reflects this trend.
What are the unique characteristics of this market cycle that lead to this phenomenon?
Institutional influence and ETF influence
Unlike previous market cycles, the current bullish sentiment is mainly driven by ETFs and institutional assets. The initial expectations of BTC ETF approval at the end of October 2023 injected strong confidence into the market, causing the BTC price to rise from below $30k to $40k in one month. Since the approval of the US spot Bitcoin ETF on January 10, 2024, more than 70 spot Bitcoin ETFs around the world have attracted more than $28 billion in new capital inflows. Institutions now hold more than $72 billion worth of Bitcoin through these ETFs and funds, driving the Bitcoin price to new historical highs again and again. Similar effects are also intuitively reflected in Ethereum and the SEC's announcement of its ETH ETF approval in May 2024.
This bull run 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-cap currencies.
While Bitcoin hit a new all-time high of $73,750 on March 14th, riding on institutional enthusiasm, the same was not reflected in the broader altcoin market.
New projects have high FDV and low liquidity
New projects in the current market generally face a problem of high FDV (fully dilluted value), low circulating supply and limited liquidity. For example, StarkNet (STRK), which was launched in late February, has a FDV of $6.9 billion despite a market value of $895 million. Only 13% of STRK is in circulation out of the maximum supply of 1 billion tokens, and it was unlocked multiple times in the following months, so that when the market value of STRK doubled to nearly $2 billion, the price of the coin dropped by 50% to $1.3.
This high FDV/low liquidity combination increases retail investor skepticism and the perception of overvaluation, making it difficult for these projects to continue to gain investor confidence and maintain price stability.
Differences between VCs and retail investors
Retail investors did initially give the same follow-up recognition to new narratives such as AI, DePin and RWA that were recognized and promoted by VCs and the market. They noticed these trends earlier this year and waited for the opportunity to actively buy in, but then the projects were often overvalued when they were launched. After a series of high-profile launches such as Sui, Starknet, Eigenlayer, ZkSync, Layer-Zero and now Blast, retail investors found that the previous follow-up VC approach did not give them corresponding rewards. So retail investors seem to have turned their attention and funds to the memecoin track, betting on some undervalued projects in the "cultural casino" to make profits. In the end, VCs and retail investors did not take over each other.
Four major exchanges
New token projects listed in 2024 on the four major exchanges - Binance, Bybit, OKX and Bitget - have also been affected by these market conditions, with most projects performing poorly since their initial listing.
* Data 25.06.2024
In addition to external market conditions, their different listing strategies may also be one of the reasons for the different performance of the four major exchanges. For example, Bitget and Bybit have listed the most tokens this year, with Bitget listing more than 310 tokens and Bybit listing more than 130 tokens. The two exchanges have focused on memecoin and related tracks. This strategy is also intended to actively cater to the market's need for high-volatility tokens this year. Binance, as an industry leader, has adopted another strategy, with a relatively low number of listings, only about 30, which may also be due to a more cautious approach to listing projects after thorough due diligence. But even so, Binance has not been immune to the overall market conditions. About 50% of new projects are currently in negative ROI. In addition, Binance's listed projects generally have a larger market cap, and these negative ROIs will have a greater impact on the overall market. This also highlights the universality of the current market downturn from another perspective.
The different strategies of these exchanges actually represent different business models in the crypto ecosystem. Some choose to cast a wide net strategy, listing many projects to provide users with a wider range of choices and entry paths. Some take a more selective approach, focusing on first-tier projects with proven records and community support.
Will we still have an altcoin season?
As the cryptocurrency market continues to decline in the already slow summer market in 2024, there are growing concerns about whether we will see a recovery in altcoin performance. In order to help users see the latest data for reference in this complex and rapidly changing environment, CoinMarketCap recently launched the new CMC Altcoin Seasonal Index. This index selects the top 100 cryptocurrencies ranked by CoinMarketCap, excluding stablecoins such as USDT and DAI, as well as projects pegged to other tokens such as WBTC, stETH, etc. If more than 75% of the top 100 cryptocurrencies have outperformed Bitcoin in the past 90 days, it means that the market has entered the altcoin season, and vice versa.
Embracing the complexity of the crypto market
From the current market perspective, institutional interest remains strong, and the market widely expects Bitcoin to reach new highs under this clamp, especially now that the halving will be superimposed with a supply shock. However, for retail investors, the low circulation/high FDV of new projects provide insufficient risk-return to investors, making them no longer willing to become the blood bag of major VCs withdrawing liquidity, and no longer actively participating in projects endorsed by these large institutions.
Different strategies among major exchanges and ongoing tensions between VCs and retail investors add further complexity to an already complex ecosystem.
However, this complexity also indicates opportunities. Although challenging, the current market conditions also provide opportunities for strategic investment in high-potential projects. If you have a clear understanding and vision, the current market may also provide a bargain hunting opportunity.
Four years ago in June 2020, Bitcoin’s dominance was 65%. This ratio dropped below 38% at the peak of the bull market in 2021, which also means that we have officially entered the altcoin season. The opportunities and gains that the market ushered in at that time will also create similar miracles in the next altcoin season. Looking at the market in the second half of 2024, we can already see a lot of opportunities, whether it is the supply shock after the halving, or the first Fed rate cut since 2021, and the upcoming US election. Both Trump and Biden have expressed support for the crypto industry, which will give the crypto market new impetus.
