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Crypto: Binance sounds the alarm for drifting small projects!

Mon 27 May 2024 ▪ 5 min of reading ▪ by Mikaia A.
Centralized Exchange (CEX)

In the ruthless world of cryptocurrencies, Binance, the giant of digital exchanges, has decided to position itself as a fixer of wrongs. In the face of a market where speculation and inflated valuations threaten to derail everything, Binance aims to play the white knight. The goal: to cleanse the crypto ecosystem and restore the image of an industry in search of maturity. Supporting sustainable and responsible projects thus becomes a priority, in the hope of averting the excesses that tarnish the future of digital currencies.

Individu armé d'une bêche travaillant sur des pièces de monnaie. Logo de Bitcoin

Binance Goes to the Frontline

In an initiative that could redefine the crypto ecosystem, Binance, author of a reform on trading conditions, has recently launched a call for small and medium-sized projects to counter a troubling trend: the drop in float and the rise in fully diluted valuations (FDV). On May 20th, the renowned crypto exchange invited these projects to join its listing programs, a gesture aimed at supporting initiatives with strong fundamentals and an organic community.

The goal is clear: to improve the blockchain ecosystem by focusing on sustainable business models and dedicated teams, far from artificially inflated market capitalizations.

We hope to enhance the development of the blockchain ecosystem through our support for small and medium-sized projects with strong fundamentals, an organic community base, a sustainable business model, and a dedicated team acting as responsible industry participants“, Binance stated.

This stance echoes a Binance Research report dated May 17th, highlighting a worrying phenomenon: more and more token projects are being launched with low circulating supplies, leading to spectacular but ephemeral price increases during bullish markets. The cause? A lack of initial liquidity, followed by a wave of new crypto offerings upon unlocking, which eventually undermines the viability of these price increases.

A new token is launched with a limited number of circulating pieces. Source: Binance Research

In short, Binance seems ready to play the role of a white knight in crypto armor, ready to defend small projects against the excesses of a market too often governed by unbridled speculation.

Behind the Scenes of a Crypto Storm

On May 17th, the mysterious crypto researcher known as Flow made a splash in the digital pond. According to him, no less than 80% of tokens listed on Binance have seen their value plummet since their launch. The verdict is clear: these new tokens are often merely “exit liquidity” for insiders. They take advantage of a restricted initial offering to inflate prices before dumping everything, leaving small investors in the lurch.

May 2024 brings little respite, with nearly $3 billion worth of crypto tokens set to be unlocked. Major projects like Sui (SUI) and Pyth Network (PYTH) alone need to release over a billion dollars worth of tokens. The early investors are sitting comfortably, waiting for their moment.

And the future looks even more tumultuous. According to Binance’s calculations, based on data from Token Unlocks and CoinMarketCap, no less than $155 billion worth of tokens are expected to be unlocked between 2024 and 2030. A token avalanche that promises to put the market to the test unless demand and capital flows suddenly soar.

In this context, Binance, which has just tightened its regulatory compliance on listing, is sounding the alarm. The massive release of tokens risks exerting unprecedented selling pressure, and without an influx of new crypto investors, the market could falter.

This is a scenario worthy of the best financial tragedies, where small savers risk bearing the brunt of the machinations of the great crypto masters.

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Mikaia A. avatar
Mikaia A.

La révolution blockchain et crypto est en marche ! Et le jour où les impacts se feront ressentir sur l’économie la plus vulnérable de ce Monde, contre toute espérance, je dirai que j’y étais pour quelque chose

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.