From Hype to Reality: How Institutional Money and ETFs Are Reshaping the New Token Landscape in 2024
In Brief
The 2024 cryptocurrency market is undergoing significant changes, with over 50% of recently listed coins experiencing negative gains due to institutional interest and ETFs’ power.
The 2024 cryptocurrency market is very different from the ones that came before it. The days of a new token’s success being assured by a well-publicized debut on a large centralized exchange supported by venture money are long gone. Rather, over 50% of recently listed coins on key exchanges are seeing negative gains in the current market.
Several things can be blamed for this change. First off, institutional interest and the power of exchange-traded funds (ETFs) are the main drivers of the present bull run. Over $28 billion in additional institutional capital has entered the market since spot Bitcoin ETFs were approved in January 2024. Although this has helped Bitcoin reach new all-time highs, the market for other cryptocurrencies hasn’t been as affected.
The Problem of Low Liquidity and High FDV
A major problem facing new token ventures in the present market is a high Fully Diluted Value (FDV) paired with a low circulating supply and restricted liquidity. Because of this combination, retail investors feel that these projects are overvalued, which makes it challenging for them to retain investor trust and price stability.
Consider StarkNet (STRK), which debuted in late February 2024. Its FDV was $6.9 billion, even though its market value was $895 million. The project’s market worth nearly doubled to $2 billion with only 13% of its maximum supply in circulation and many scheduled unlocks; nevertheless, its price dropped by 50% to $1.3.
The Disparity Between Retail and Venture Capitalists
The rising gulf between venture capitalists (VCs) and regular investors is another noteworthy development. While VCs have been marketing narratives around AI, DePin (Decentralized Physical Infrastructure), and RWA (Real-World Assets), retail investors have been more dubious of these high-profile launches.
Retail investors have turned their focus to other ventures following a string of underwhelming results from initiatives including Sui, Starknet, Eigenlayer, ZkSync, Layer-Zero, and Blast. Viewed as a “cultural casino” where they may identify undervalued initiatives with potential for rapid riches, many have turned to the meme coin market.
The Effects of Exchange Strategies
The contemporary token ecosystem has also been shaped by the tactics used by significant cryptocurrency exchanges. An aggressive listing approach has been implemented by exchanges such as Bitget and Bybit, where in 2024 alone, Bitget listed over 310 tokens and Bybit listed over 130. These exchanges have catered to the market’s need for high-volatility tokens by placing an important focus on memecoin and similar tracks.
Industry leader Binance, on the other hand, has adopted a more cautious stance, listing just over 30 new projects throughout that time. About 50% of Binance’s recently listed projects, despite this careful approach, are now exhibiting negative returns on investment (ROI).
Photo: Listings on Binance
The Quest for an Altcoin Season
There’s a lot of conjecture over whether altcoin performance will rebound in the summer of 2024 when the larger cryptocurrency market slows down. The CMC Altcoin Seasonal Index was established by CoinMarketCap to assist consumers in navigating this difficult market. This program monitors the performance of the top 100 cryptocurrencies against Bitcoin over a 90-day period, excluding pegged tokens and stablecoins.
According to the index, when more than 75% of these leading cryptocurrencies beat Bitcoin, an altcoin season is said to have begun. Since the market hasn’t yet crossed this barrier, the cycle is still controlled by Bitcoin at this point in time.
Institutional Focus and Upcoming Opportunities
Institutional interest in the cryptocurrency industry is still high despite the difficulties faced by new coins. Many people believe that institutional investment and the impending halving event, which will cause a supply shock, will propel Bitcoin to unprecedented heights.
Retail investors, however, are now more cautious, especially when it comes to new ventures with high FDV and little circulation. They’re not as eager to provide VCs the liquidity they need to sell their holdings, which creates a more intricate and subtle market dynamic.
The Function of Token Development in Practical Uses
Tokens that represent tangible goods or utilities are becoming more and more popular as the market for speculative tokens encounters difficulties. There are now more chances for token creation thanks to the movement toward tokenization of RWA.
Developing smart contracts, selecting suitable token standards, determining a use case, assuring regulatory compliance, and interfacing with physical assets are some of the crucial processes involved in producing these tokens. In the long term, this method of token development could result in more worthwhile and sustainable initiatives.
Platforms and Tools for Developing Tokens
The contemporary token environment has been significantly shaped by the emergence of platforms and tools for token creation. Numerous blockchain systems, including Ethereum, Binance Smart Chain, Polygon, Solana, Algorand, Stellar, NEO, and EOS, are now available to developers with a vast array of tools.
These resources have reduced the entrance barrier for token production, ranging from online integrated development environments (IDEs) like Remix to all-inclusive development frameworks like Truffle. They have, meanwhile, also added to the market’s token proliferation, which makes it harder for high-caliber initiatives to be distinguished.
Decentralized Finance’s Ascent
Decentralized finance is becoming more and more popular, and this has opened up new possibilities for token usage and development. To operate, DeFi protocols frequently need tokens from liquidity providers, governance, and other specialized sources.
Token ecosystems are becoming increasingly intricate and linked as a result of this development. Although newcomers may find it difficult to negotiate this complexity, it also creates new opportunities for diversity and financial innovation.
In the long run, the token market will benefit greatly from the tokenization of real-world assets. Tokenizing anything from financial instruments and real estate to commodities and intellectual property might fall under this category.
Tokenization has promise for boosting market efficiency, lowering investor entry barriers, and increasing liquidity. Yet, in order to fully realize this potential, adoption, legal, and technological obstacles must be overcome.
Disclaimer
In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.
About The Author
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
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Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
