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Binance sounds the alarm for small projects adrift!
3h30 ▪ 5 minute read ▪ by Mikaia A.
In the cutthroat world of cryptocurrencies, Binance, the digital exchange giant, has decided to position itself as the righter of wrongs. Faced with a market where speculation and inflated valuations threaten to derail everything, Binance aims to be the white knight. The goal: to clean up the crypto ecosystem and restore the image of an industry seeking maturity. Supporting sustainable and responsible projects therefore becomes a priority, in the hope of avoiding the excesses that cloud the future of digital currencies.
Binance goes to the forefront
In an initiative that could redefine the crypto ecosystem, Binance, author of a reform of trading conditionshas recently launched a call for small and medium-sized projects to counter a worrying trend: the decline in free float and increase in fully diluted valuations (FDV). On May 20, the renowned cryptocurrency exchange invited these projects join its listing programsa gesture aimed at support initiatives with strong foundations and an organic community.
The goal is clear: to improve the blockchain ecosystem focusing on sustainable business models and dedicated teamsaway from artificially inflated market capitalizations.
“We hope to enhance the development of the blockchain ecosystem through our support of small and medium-sized projects with strong fundamentals, an organic community base, a sustainable business model and a dedicated team acting as responsible industry participants,” he said Binance.
This position resonates a report by Binance Research of May 17, highlighting a worrying phenomenon: more and more symbolic projects are being launched with low-circulation stockbringing to spectacular but ephemeral price increases during bull markets. The cause? An initial lack of liquidity, followed by a wave of new cryptocurrency offerings upon unlocking, ultimately undermining the viability of these price increases.
In short, Binance seems ready to take on the role of a white knight in crypto armour, ready to defend small projects from the excesses of a market too often governed by unbridled speculation.
Behind the scenes of a cryptocurrency storm
On May 17, the mysterious cryptocurrency researcher known as Flow entered the digital pond. In his opinion, no less than 80% of the tokens listed on Binance have seen their value collapse since their launch. The verdict is clear: these new tokens are often simply “exit liquidity” for insiders. They take advantage of a limited initial offer to inflate prices before giving up everything, leaving small investors in the lurch.
May 2024 brings little respite, with nearly $3 billion worth of crypto tokens will be unlocked. Only major projects like Sui (SUI) and Pyth Network (PYTH) need to release tokens worth over a billion dollars. Early investors are sitting comfortably, biding their time.
And the future looks even more tumultuous. According to Binance calculations, based on data from Token Unlocks and CoinMarketCap, It is expected that tokens worth no less than $155 billion will be unlocked between 2024 and 2030. A symbolic avalanche that promises to test the market unless demand and capital flows suddenly increase.
In this context, Binance, which has just tightened its regulatory compliance at the time of listing, the alarm is sounding. The massive token release is likely to exert unprecedented selling pressure, and without an influx of new cryptocurrency investors, the market could falter.
This is a scenario worthy of the best financial tragedies, where small savers risk bearing the brunt of the machinations of the great masters of cryptocurrencies.
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Mikaia A.
The blockchain and cryptocurrency revolution is underway! And on the day when the impacts are strong and the most vulnerable economy in the world is affected, against all hope, you will say that I was for what I chose
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be relied upon as investment advice. Do your research before making any investment decisions.