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Binance experts reveal threat from tokens with low circulating supply
Tokens with low initial supply in circulation to completely dilute value indices and threaten the crypto market.
Binance experts have Published a new report analyzing tokens released in 2024. The study shows that the ratio of initial circulating supply to fully diluted value (FDV) was the lowest in several years, indicating potentially high selling pressure that could negatively impact the crypto market.
Source: Binance
At the same time, the total number of tokens issued since the beginning of 2024 is already close to the 2023 value, with Binance analysts suggesting that the number of projects with high FDV, dictated by the low initial supply in circulation, is constantly growing .
With a capitalization to FDV ratio of 12.3%, approximately $80 billion in financial injections will be needed to support the current prices of these tokens. Experts noted that this will support demand and balance pressure from sellers.
Low circulating supply driving initial price increases
The main reason for this trend is the low volume of circulating supply when tokens are launched. With the same volume of demand, a low percentage of circulating supply stimulates price increases in the project launch phase.
Source: Binance
The launch of such projects changed the market dynamics, increasing selling pressure. According to the report, tokens worth US$155 billion will be unlocked by 2030. Given this, it is extremely important to consider and monitor the timelines for releasing new volumes of assets into the market.
The role of meme coins in the market
Experts conclude that the structure is partially responsible for the new wave of demand for meme coins. Furthermore, they noted that some investors see this asset class as a way to counter large projects that are launched with the participation of institutional investors.
Meme coins have become an important part of the landscape in the crypto world. Analysts at Franklin Templeton I believe this type of asset gained popularity due to some traders’ desire to make quick profits with low fees.
The excitement around meme coins is unabated. These tokens are still appearing significant growth despite the general dynamics of the crypto market, with the market capitalization of the meme exceeding US$58 billion.