Compared with its glorious status in the past, the collapse of VC coins in 2024 seems to be a foregone conclusion. The characteristics of high valuation (FDV), low liquidity and "retail investors taking over" make VC coins the focus of criticism in the crypto market.
So, what is the root cause of the collapse of VC coins? What impact will this "VC coin effect" have on the global crypto market? Why are VC coins criticized? Most importantly, how can VC coins get out of trouble and achieve new development?
It is not just VC coins that are in trouble. VC and "VC coins" in the entire crypto market have also become the target of criticism in the current environment. Although many people believe that VC coins are the root cause of the current bull market's difficulty in taking over, this is not the case. Compared with other market situations, we will find that not only VC coins, but also fully circulated altcoins and even Ethereum (ETH) have experienced a continuous decline. Looking back at the summer era of DeFi, the initial circulation rate of most tokens did not exceed 5%.
Therefore, it is not comprehensive enough to explain the collapse of these tokens simply by insufficient liquidity.
The root cause of the collapse of VC coins may involve multiple factors: including market concerns about high valuations, liquidity issues, and market sensitivity to the issue of "takeovers". Since most of these tokens are supported by venture capital and have obvious liquidity problems, investors' confidence in their value has been impacted. This situation not only affects VC coins themselves, but also affects the entire crypto market.
To get out of the current predicament, VC coins need to improve transparency and liquidity and adopt a more robust market strategy. At the same time, the entire crypto market also needs more mature policies and mechanisms to avoid similar problems from happening again.
