In the competitive and often chaotic world of cryptocurrencies, Binance, the leading digital exchange, is positioning itself as a savior of the industry. Amidst a market rife with speculation and inflated valuations, Binance aims to clean up the crypto ecosystem and restore the image of an industry striving for maturity. The focus is on supporting sustainable and responsible projects, hoping to prevent the excesses that threaten the future of digital currencies.
Binance Takes Action
Binance has launched a significant initiative to counter troubling market trends such as the drop in circulating supply and the rise in fully diluted valuations (FDV). On May 20th, Binance invited small and medium-sized projects to join its listing programs, supporting initiatives with solid fundamentals and genuine community backing.
“Our goal is to improve the blockchain ecosystem by focusing on sustainable business models and dedicated teams, steering clear of artificially inflated market capitalizations,” Binance stated.
This move aligns with a Binance Research report from May 17th, which highlighted a disturbing trend: many token projects are launched with low circulating supplies, leading to temporary price surges during bullish markets. The root cause is a lack of initial liquidity, followed by a flood of new crypto offerings upon unlocking, which eventually destabilizes these price increases.
Tackling Market Manipulation
On May 17th, the crypto researcher Flow revealed a stark reality: 80% of tokens listed on Binance have seen their value drop since their launch. These new tokens often serve as “exit liquidity” for insiders who manipulate prices through restricted initial offerings before selling off, leaving smaller investors at a disadvantage.
In May 2024, nearly $3 billion worth of crypto tokens are set to be unlocked, including significant releases from projects like Sui (SUI) and Pyth Network (PYTH). Early investors are poised to benefit, potentially at the expense of the broader market.
The Road Ahead
According to Binance’s calculations, based on data from Token Unlocks and CoinMarketCap, an estimated $155 billion worth of tokens will be unlocked between 2024 and 2030. This impending token avalanche could challenge the market unless there is a surge in demand and capital flows.
To address these challenges, Binance has tightened its regulatory compliance on listings and is sounding the alarm about the risks posed by the massive release of tokens. The market could face unprecedented selling pressure without an influx of new crypto investors.
Binance is stepping up as a “white knight” in the crypto world, ready to defend small and medium-sized projects against the market’s excesses. By focusing on sustainable business models and responsible industry participants, Binance aims to foster a more robust and mature crypto ecosystem. This proactive stance is crucial as the market braces for potential turbulence from the impending release of a vast number of tokens.
Source: cointribune.com
