Cryptocurrency market trends are exhibiting a shift in the once celebrated “Binance effect,” where tokens listed on the esteemed exchange Binance no longer guarantee sustained price surges, unveiling a pattern that could signal an evolution in investor sentiment and market maturity.
Recent analyses, including an insightful thread by crypto researcher Flow (@tradetheflow_), reveal a concerning pattern among newly listed tokens on Binance. Over the past six months, more than 80% of these tokens have seen their values plummet post-listing, challenging the prior norm, where listings on Binance would almost certainly result in price upticks.
The statistical overview of cryptocurrency listings on Binance over the past six months paints a stark picture of the current market dynamics. The Fully Diluted Valuation (FDV) for these tokens at the time of listing averaged a staggering $4.225 billion with some reaching the dizzying heights of $11.7 billion. Despite these high initial valuations, the post-listing performance tells a different story, with an average decline of 18.19% across the board. This suggests a disconnect between the initial hype and the sustainable market performance of these tokens.
However, not all tokens conform to this downward trend. There are notable exceptions that have bucked this negative trajectory. Memecoin (MEME) and ORDI stand out as outliers, having managed to maintain or even increase their value post-listing.
Similarly, Solana-based tokens like Jupiter (JUP) and Dogwifhat (WIF) have also shown resilience, possibly due to their unique positioning within the crypto ecosystem or the lack of heavy backing from tier 1 venture capitalists, which often leads to inflated initial valuations.
Flow’s examination points to a stark reality where tokens backed by top-tier VCs are launching at inflated valuations without substantial user bases or community support, leading to rapid devaluations. Prominent voices in the crypto community, such as Alex Krüger (@krugermacro) and McKenna (@Crypto_McKenna), criticize current token launch strategies. They argue that high FDVs and low float scams prevalent among VC-backed protocols not only undermine the asset’s potential but also tarnish the broader industry’s reputation.
In parallel, in a 2023 Reddit post on r/CryptoCurrency, user Qptimised revisited the “Binance Effect,” analyzing the price impact of new cryptocurrency listings on Binance. The study, updated for the economic conditions of 2023, assessed how prices of newly listed tokens, such as Worldcoin and Arbitrum, initially spiked but generally fell over time.
