Between 2024 and 2030, tokens worth approximately $155 billion will be unlocked, inevitably exerting selling pressure on assets. This observation was made by experts from Binance Research.
The prevalence of tokens launching with high valuations and low initial supplies has stirred discussions due to concerns over limited upside for retail investors.
Our report examines the situation, driving forces, and considerations for investors/teams.https://t.co/U1XJJ89J5e
— Binance Research (@BinanceResearch) May 17, 2024
Experts noted a trend among crypto projects to issue a small initial supply of tokens relative to the fully diluted value (FDV) of assets.
According to researchers, the future unlocking of a significant number of tokens introduces considerable uncertainty for investors. In some cases, the market circulation of coins is 6-20% of the projected issuance.
Analysts believe it will be challenging for these assets to maintain price levels as new volumes enter the market.
They suggest that the situation could be significantly mitigated by the policies of venture investors, who typically hold a substantial number of tokens. However, to avoid sell-offs, project teams must closely engage with them, analysts emphasized.
Regarding the volumes of tokens to be unlocked in the coming years, Binance Research noted that a well-thought-out tokenomics strategy could support market quotations under these conditions.
Experts advised investors to:
- evaluate assets not by market value, but by ratios such as FDV to revenue, TVL, and other indicators;
- pay attention to the progress of the project’s life cycles (for example, whether it has moved beyond the white paper stage);
- monitor the activity of the team and the community on social media.
“Only when the tide goes out do you discover who’s been swimming naked,” Binance Research specialists reminded, quoting Warren Buffett.
Earlier, 10x Research pointed out the negative impact of planned token unlocks on the altcoin market.