We analyse the performance of the newly listed projects in 2024 on the big 4 exchanges, and what it says about the current market.
2024 Token Listing Performance
As we delve into 2024, the cryptocurrency market continues to evolve, presenting both challenges and opportunities for investors and projects aike. Based on previous cycle performances, there was near consensus that new tier-1 projects backed by major venture capital (VC) firms and with high-profile launches on prominent centralized exchanges (CEXs) would perform robustly in a bull market on the back of positive Bitcoin and crypto developments.
However, the current market paints a more nuanced picture, and the overall performance of newly listed tokens has been lackluster. The majority of the new tokens listed on the big 4 exchanges experienced negative performance since their initial listing. The broader altcoins have also been underperforming. Altcoins (excl ETH) dropped 17% against BTC since the start of 2024 as seen in the TOTAL3/BTC chart, which pits BTC against the total market capitalization of the top 125 cryptocurrencies, excluding BTC and ETH.
So what are some of the unique characteristics in this market cycle that has caused this phenomenon:
Institutional Influence and ETF Impact
Unlike previous market cycles, the current bullish sentiment is largely driven by ETFs and institutional assets. The initial anticipation of a BTC ETF approval started in late Oct 2023, which injected strong confidence in the market and led the BTC price to rise from sub 30k to $40k within a month. Since U.S. spot Bitcoin ETFs were approved on January 10, 2024, over 70 spot Bitcoin ETFs globally have attracted over $28 billion in additional inflows, and the institutions now hold over $72 billion worth of Bitcoin in these ETFs and funds globally, pushing the Bitcoin prices to new ATHs. Similar effects can be observed on Ethereum and the SEC’s announcement on its ETH ETF approval in May 2024. This mini-bull run seems to be driven by institutions, and reserved for mainstream coins. BTC, ETH, SOL, TON, and BNB are among the best performing large cap coins excluding memecoins.
While Bitcoin has benefitted from this institutional attention, culminating in a new all-time high price of $73,750 on March 14th, the same cannot be said for the broader altcoin market.
New projects have High FDV & low liquidity
New projects, in particular, face a challenging environment characterized by very high fully diluted valuations (FDV), low circulating supply, and limited liquidity. For example, StarkNet (STRK), launched in late February, boasts an FDV of $6.9 billion despite a market capitalization of $895 million. Only 13% of STRK tokens from the maximum supply of 1 billion are in circulation. This is more appreant when the multiple unlocks occurred in the following months, even as STRK's market cap doubled to nearly $2 billion, the token price dropped by 50% to $1.30.
This high FDV/low float combination has increased retail investor cynicism and perception of overvaluation, making it difficult for these projects to gain organic investor confidence and maintain price stability.
The VC vs Retail Divide
Despite strong new narratives like AI, DePin, and Real World Assets (RWA), retail investors caught on early this year. After that, they’re now buying into new projects at highly inflated valuations, after a series of high-profile launches by Sui, Starknet, Eigenlayer, ZkSync, Layer-Zero, and now Blast… Retail investors seem to have shifted their attention and funds towards the meme coin super cycle, gambling at the “culture casino” where projects are launched at low valuations.
The Big 4 Exchanges
The newly listed tokens on the four major exchanges - Binance, Bybit, OKX, and Bitget have also been impacted by these market conditions, with majority projects experiencing negative performance since their initial listing.
Apart from external market conditions, their different listing strategies may also be one of the reasons for the varying performances of the new crypto projects listed by the four major exchanges. For example, Bitget and Bybit have listed the most amount of the tokens this year among the Big 4, with Bitget listing over 310 tokens YTD and Bybit listing over 130 tokens YTD. These two exchanges have predominantly focused their new listings on memecoins and its related sectors. These tokens are often more volatile in nature. As a result, around 80% and 70% of the new tokens listed by these two exchanges, respectively, have experienced losses. Binance seems to be adopting a different strategy as the industry leader. Despite applying a more cautious approach to list selected projects after thorough due diligence, Binance has not been immune to the slump in overall market conditions - 50% of the new projects on Binance are currently showing a negative ROI. Additionally, the projects listed on Binance generally are large market-cap coins, and these negative ROIs have a greater impact on the overall market. In a sense, this data highlights the widespread nature of the current market downturn from another perspective.
The contrasting approaches of these exchanges highlight the different business models at play in the crypto ecosystem. Some opt for a wide-net strategy, listing numerous projects to give users access to a broad range of options. Others take a more selective approach, focusing on tier-1 projects with demonstrated track records and community support.
Will We Still Have an Altcoin Season?
As the 2024 crypto market continues to dip during the historically sluggish summer months, there is increasing concern over whether we will see a resurgence in altcoin performance. To help users navigate this complex and fast-moving environment with the latest data available, CoinMarketCap has recently launched its new CMC Altcoin Season Index. This Index uses the top 100 coins ranked on CMC (excluding stablecoins and wrapped tokens) and compares them based on their rolling 90-day price performances. If 75% of the top 100 coins outperform Bitcoin in the last 90 days, it’s Altcoin Season. If only 25% or fewer outperform Bitcoin, it’s Bitcoin Season.
Embracing Complexity in the Crypto Market
Institutional interest remains strong and is widely expected to drive Bitcoin to new heights, especially with the post-halving supply shock. However, the perceived lack of sufficient risk-reward that new tier-1 projects with low float/high FDV offer investors has made them wary of being bagholders serving as exit liquidity for VCs.
The divergent strategies of major exchanges and the ongoing tension between VC and retail approaches add further layers of complexity to an already intricate ecosystem.
However, within this complexity lies opportunity. While challenging, the current market conditions also present opportunities for strategic investments in high-potential projects.
Four years ago, Bitcoin dominance stood at 65% in June 2020. This dropped to under 38% by the peak of the 2021 bull cycle when we entered the altcoin season. The second half of 2024 will bring fresh impetus to crypto markets thanks to drivers like the post-halving supply shock, the first expected Fed rate cuts since 2021, and a contentious US presidential election that has already seen both Trump and, to a lesser extent, Biden, begin to voice support for the crypto industry. Could the reset in altcoin prices be a great buying opportunity or a sign of how the rest of the cycle would play out?
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