According to a May 17 post by a cryptocurrency researcher nicknamed Flow, 31 tokens listed on Binance were examined in the last six months. The result of this review is quite worrying for investors. Because only five of the tokens in question have managed to gain value. In other words, 80% of newly listed tokens have lost value since their launch. This situation shakes both the general health of the cryptocurrency market and investors’ confidence in new projects.

Anndy Lian, intergovernmental blockchain expert and author of the book “NFT: From Zero to Top”, states that the fact that more than 80% of newly listed tokens have lost value shows that the cryptocurrency market is currently going through a difficult period. In his statement, Lian emphasizes that there is stagnation in the general market, but certain altcoins are still in an upward trend. Calling investors to be cautious, Lian says, “Many of the projects listed on Binance may enter a longer growth period. This growth may not be sudden as in the previous bull market.”

In addition to Lian’s warning, the high valuations of the newly listed tokens also pose an important question mark for investors. The researcher, pseudonymous Flow, notes that these tokens are listed on average with a fully diluted valuation (the value calculated as if all tokens in the market were in circulation). It is noteworthy that these valuations are above 4.2 billion dollars. But how meaningful are these high valuations for projects that don’t have a real user base? Flow states that this situation can significantly limit the upside potential of the tokens.

According to Flow’s analysis, the launch of newly listed tokens at high valuations also raises another concern. It is thought that these tokens may serve the purpose of providing “exit liquidity” rather than being a real investment tool for investors. Exit liquidity can be defined as a mechanism that provides sufficient liquidity for early investors or the team behind the project to exit their investments. In this case, tokens released with high valuations may be aimed at attracting the attention of retail investors and attracting their investments into the project. Later, early investors or the project team can exit the market by selling the tokens they hold at high prices. This situation may leave retail investors who invest in the new project with losses.

Despite the negative developments in Binance, the cryptocurrency market is always full of surprises. The recent rise of memecoins can be cited as an example of this situation. The token named Ordi achieved the most profitable rise, gaining over 261% in value since its launch, despite not having any capital company support. On the other hand, the controversial memecoin Dogwifhat was another name that benefited from this rise with a price increase of over 117%. However, this rapid rise of memecoins reveals another point that investors should be careful about. Memecoins are often created based on pop culture references and often do not have a strong use case. Therefore, their rise is often based on speculation and enthusiasm from retail investors. This situation can cause the prices of memecoins to become overvalued in a short time and then experience sudden declines.

The fact that more than 80% of newly listed cryptocurrencies on Binance lost value is an important lesson for investors. This situation once again emphasizes that the cryptocurrency market carries high risks and the need to conduct comprehensive research before investing in new projects. It would be a healthier investment strategy for investors to focus on projects with a strong project team, a real usage area and a clear road map, rather than high valuations. Additionally, acting with a long-term perspective rather than short-term gains will make you less affected by the fluctuations of the cryptocurrency market.