Binance Supports Small and Medium Crypto Projects to Address Low Circulating Supply and High Fully Diluted Valuation

Binance’s Initiative to Foster a Healthier Crypto Ecosystem

Binance, the world’s largest cryptocurrency exchange, recently called upon small and medium-sized crypto projects to tackle the prevalent trend of low float and high fully diluted valuations (FDV). The exchange is urging these projects to participate in its listing programs, emphasizing the significance of solid fundamentals and sustainable models.

Binance’s Commitment to Supporting Projects

Binance has pledged its support to projects that exhibit strong fundamentals, maintain an organic community base, and operate with sustainable business models. The exchange aims to enhance the blockchain ecosystem by backing small and medium-sized projects that have dedicated teams and act as responsible industry participants.

The Growing Trend of Low Float in New Crypto Projects

There is a growing trend where new projects launch with high market capitalizations but retain a large portion of their token supply locked, resulting in low float. Binance Research highlighted the commonality of launching with low-circulating supplies, causing rapid price appreciation in bullish market conditions. However, this price growth may not be sustainable when a significant number of tokens are unlocked and flood the market.

Token Unlocking Trends and Market Impact

It is projected that approximately $3 billion worth of vested crypto tokens are scheduled for release in May 2024 alone. Projects like Sui and Pyth Network are expected to unlock over $1 billion in tokens, including those allocated to early investors. Binance estimates that around $155 billion in tokens will be unlocked between 2024 and 2030.

Insights on Token Performance on Binance

A pseudonymous crypto researcher noted that 80% of tokens listed on Binance have experienced declines in the past six months since their launch. These tokens are seen as “exit liquidity” for insiders, taking advantage of restricted retail access due to low initial circulating supply. While some tokens like Ordi have seen significant profits, concerns remain about the high initial fully diluted valuations of new tokens listed on Binance.