Crypto News – The long-term viability and pricing behavior of recently introduced cryptocurrencies are negatively impacted by profit-driven venture capitalists (VCs).
Crypto Analyst Route 2 FI Predicts Money-hungry VCs Will Poorly Impact Token Launches in the Long Term
Popular cryptocurrency analyst Route 2 FI claims that while VCs provide fresh liquidity for altcoin launches, they also significantly increase sell pressure, harming the token’s long-term price movement.
Permissionless token listing and money-hungry VCs are bad for the individual token long term. Every year 100 new tokens launch. Diluting existing ones. It’s now April 2024, and inflows into altcoins seem way more selective and not enough to offset big unlocks.
Route 2 FI
What Dangers Do Token Launches Face?
The current token launch trend is beset by several problems, chief among them being their initially high fully diluted valuation (FDV), which attracts early VC investors with lengthy unlocking timelines yet promises substantial airdrop allocations for early adopters. The majority of these new tokens will see a price drop as a result of this method.
I think most new VC scam coins (high FDV coins) eventually will dump hard AF. And that you can use this to your advantage in pair trading or in situations where you want to hedge.
Route 2 FI
The problem with massive VC unlocks, according to the analyst, is that there isn’t enough demand from cryptocurrency investors to offset the incentive to sell and the significant rise in a coin‘s supply that is in circulation.
At some point, the supply will outnumber the demand and we will start spiraling downwards due to massive inflation. Early buyers will get trapped, which leads to bearish sentiment among the community, reduced TVL in the protocol, devs (if any) leaving for greener fields, and team members quitting.
Route 2 FI
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