Research Summary
The report discusses the increasing market cap of altcoins due to new token launches and supply influx. It highlights the role of exchanges in listing new tokens and the challenges faced by small projects. The report also explores the impact of low float tokens and the potential solutions to address the issues.
Key Takeaways
Increasing Market Cap of Altcoins
- Altcoin Market Growth: The report notes that the total market cap of altcoins is steadily increasing due to constant new token launches and new supply hitting the market. However, not all altcoins are expected to perform well.
Role of Exchanges in Token Listing
- Power of Exchanges: Exchanges hold significant power in deciding whether to list a new token project or not. The report suggests that it has become increasingly difficult for small, unknown projects to get listed on major exchanges like Binance without substantial backing, high TVL, and strong social metrics.
Challenges of Low Float Tokens
- Low Float Tokens: The report discusses the challenges associated with low float tokens, which are tokens with a small portion of their total supply available for trading. These tokens can face constant sell pressure as more tokens unlock and hit the market, leading to a supply-demand imbalance and potential price decline.
Impact of High Fully Diluted Valuation (FDV)
- High FDV Issues: The report highlights the problems associated with high FDV at token launch, including less price discovery, reduced trading interest from retail investors, and potential token dumping by early investors.
Potential Solutions to Address Issues
- Addressing Market Issues: The report suggests several potential solutions to address the issues, including exchanges listing more tokens with high organic user demand, avoiding super low float token launches, and rewarding teams that have built real and loyal communities.
Actionable Insights
- Consider Market Dynamics: Investors should consider the dynamics of the altcoin market, including the increasing market cap and the role of exchanges in token listing, when making investment decisions.
- Understand Low Float Tokens: Investors should understand the challenges associated with low float tokens, including the potential for constant sell pressure and price decline, before investing in such tokens.
- Assess FDV at Token Launch: Investors should assess the fully diluted valuation (FDV) at token launch and consider the potential impact on price discovery and trading interest.
- Monitor Exchange Practices: Investors should monitor the practices of exchanges, including their listing criteria and approach to low float token launches, as these can significantly impact the performance of new tokens.
