Altcoins
VCs Hold 1,100% Gains on These Altcoins, But for How Long?
Venture capitalists have been making huge gains on a select group of altcoins. However, recent indicators suggest that these investors may be considering selling their holdings soon.
This outlook underscores the need for cautious optimism among token holders. While decisions to hold or sell altcoins can have a significant impact on the overall profitability of these VCs, the ripple effect will likely extend to other investors.
Heavy Dumping Pressure: VCs Could Sell Altcoins at 1,100% Gains
Ethereum Name Service (ENA), Renzo (REZ), Ondo Finance Holders of (ONDO), Dymension (DYM), Saga (SAGA), and Celestia (TIA) tokens could be treading on dangerous ground. Data platform Dune Analytics shows that VCs have an unrealized profit of 1,100% on these altcoins, creating significant dumping pressure.
High dumping pressure indicates strong selling sentiment in the market or perceived risks associated with altcoins. This could lead to losses for token holders as VCs reevaluate their investment strategies and consider rebalancing portfolios.
“There are better ways to make money in this market than waiting for the inevitable drop in high FDV/low market cap tokens,” said cryptocurrency researcher Emperor Osmo. warned.
In particular, as destocking pressure weighs heavily, they could diversify into other assets, adjust their risk exposure or implement hedges. These strategies, which would protect them against market declines, could affect token holders who are not forward-thinking.
Learn more: Best Cryptocurrencies to Buy Now: Top Cryptocurrencies to Watch in July 2024
VC Holdings. Source: Dune
BeInCrypto contacted Hitesh Malviya, the founder of chain analysis The DYOR platform discussed the different risk levels of VC-backed tokens. When asked about the tokens with the highest risk of VC sales, Malviya cited AltLayer and Connext. On the other hand, he considers zkSync and LayerZero to have a lower risk spectrum, suggesting that these tokens have a more stable investment base.
Malviya cites Dimo as an example of a token that saw heavy venture capital investment and suffered greatly after a selloff. Despite substantial support, Dimo remains underwater after the venture capital selloff, which serves as a warning in the volatile cryptocurrency market.
Venture capitalists flock to the hottest stories of 2024
A close look at altcoins shows that they participated in some of the hottest narratives in 2024. Among them, ONDO was at the heart of the real-world asset (RWA) narrative, with Congress meets to discuss tokenizationThis year, the sector has attracted mainstream attention. Cryptocurrency-focused companies, global bankers, and asset managers like BlackRock are driving this interest.
Ethereum Name Service has also been the subject of intense interest in 2024. The protocol allows users to use easy-to-remember domain names for their cryptocurrency addresses. As the future of Web3 takes center stage, ENSbuilt using Ethereum smart contracts, has seen growing adoption. In tandem, Open interest in the token hits multi-year highs Monday.
For REZ, a liquid staking token, interest in Renzo protocol increased after crypto exchange Binance added it to the Launchpool programThe staking narrative also played a role in Celestia, with the price of the TIA token reacting across major cryptocurrency exchanges Enabling Token Staking.
Learn more: What are the best altcoins to invest in July 2024?
On the other hand, SAGA, a GameFi Layer 1 blockchain token, rose to fame thanks to the tailwind of a airdrop campaign involving partnerships with more than 100 projects.
Infrastructure companies that attract the most early-stage investment during peak periods in the sector make sense. As the hype around these companies stories With the emergence of new themes, VCs can identify interesting new projects to allocate their funds to and diversify their portfolios.
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