Chainfeeds Introduction:
According to the table made by @tradetheflow_, the tokens listed on Binance recently have performed poorly. Why do these "low circulation, high FDV" tokens almost all fall? Haseeb, managing partner of Dragonfly, wrote an article starting with data and analyzed the three mainstream views one by one.
Article Source:
https://x.com/hosseeb/status/1792257063399403669
Article author:
Haseeb Qureshi
View:
Haseeb Qureshi: 1. VC/KOLs are dumping on retail investors. If this is the case, we should see: tokens with short lock-up periods sell off faster than other tokens, while projects with long lock-up periods or no KOLs perform well. However, from listing to early April, the tokens performed well. By mid-April, everything fell together. It is true that some VCs will dump on retail investors, and there are also VCs that do not lock up, hedge outside the exchange, or even break the lock-up period. But these are low-level VCs, and most teams working with these VCs will not be listed on a primary exchange. In fact, under Rule 144a, anyone regulated by the SEC must comply with a 1-year lock-up period. In addition, for large VCs like us, our positions are too large to hedge outside the exchange, and we are generally contractually obligated not to do so. Therefore, for some tokens, there may be investor/KOL selling, but this theory cannot be explained if all tokens fall at the same time. 2. Retail investors angrily abandon these tokens and only buy meme coins. If so, we should see: As retail investors turn to memecoins, the prices of these newly issued tokens fall. However, I compared SHIB trading volume to a basket of tokens, and the timing does not match. The memecoin craze peaked in March, but the basket of tokens sold off a month and a half later in April. The problem is not the volume, but the price of the asset. I visited Binance's Coingecko page and looked at the top 50 tokens by trading volume. About 14.3% were memecoin pairs. Memecoin trading is only a small part of cryptocurrency trading. Financial nihilism is a phenomenon, but most people are still buying tokens because they believe in some technical story, whether it is right or wrong. 3. The supply is too small for meaningful price discovery. This is the most common argument, and Binance Research even released a report to illustrate this problem: It looks like the average is about 13%, which is low, right? According to the data provided by @0xdoug, the average circulation of these tokens in the last cycle of TGE was 13%. I pulled the Binance 2022 list and spot-checked a few of them, with IMX having a first-day circulation rate of 10%, APE at 27% (but 10% of that is APE vault, so rounded to 17%), and OP at 5%. It's not hard to see that 13% of circulating supply is similar to past cycles. Low circulating supply is definitely a problem, but the first-day circulation of most tokens on Binance is within the historical normal range. [Original text in English]
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