Over the past six months, investors who purchased the latest cryptocurrency listings on Binance, the leading cryptocurrency exchange, have experienced a collective decline of over 18%.
This occurred despite a broader rally in the cryptocurrency market during the same period, as more than 80% of these tokens saw their values decrease post-listing.
According to analysis conducted by cryptocurrency researcher Flow, out of the 31 tokens listed on Binance, only five managed to appreciate in value. These included MEME, a memecoin, as well as ORDI, JUP, JTO, and WIF. Memecoins like WIF experienced appreciation amidst a frenzy in memecoin trading, while ORDI rose due to the absence of top-tier venture capital backing. JUP and JTO gained momentum on the Solana blockchain.
The analyst noted that these tokens are often listed on Binance with lofty valuations, with the average fully diluted valuation (FDV) exceeding $4.2 billion despite limited established user bases, which constrains potential upside. Furthermore, these tokens may primarily serve as "exit liquidity" for insiders who acquired them earlier, taking away potential upside for retail investors.
Recent surges in memecoins like PEPE followed a meme stock trading frenzy ignited by the return of a trader central to the 2021 movement, Keith Gill, also known as RoaringKitty and DFV on Reddit. This surge led to widespread media coverage and parallels were drawn to the 2021 meme stock mania, which also saw DOGE experiencing a surge.
In summary, while certain tokens listed on Binance have appreciated, a significant majority have faced declines, underscoring the risks associated with investing in newly listed cryptocurrencies, particularly those with inflated valuations and limited fundamentals.
May 2024, Cryptoniteuae