Analyst AB Kuai Dong warns of major price declines for newly launched tokens after exchange listings.
He advises project owners to brace for drops of over 80% due to liquidity issues and high valuations.
The overall crypto market has dropped 15% in the past 20 days, now valued at $3.19 trillion.
Prominent crypto analyst AB Kuai Dong recently that newly launched tokens can face major price declines upon exchange listings. He has advised project owners to prepare for drops of over 80%, citing liquidity constraints and high market valuations.
This aligns with the ongoing market trend where new token listings often face heavy sell-offs due to a mix of initial hype, VC unlocks, and lack of community growth.
Earlier on Monday, Dong noted that many projects are launching tokens with inflated market values due to previous overvaluations and high costs associated with selling tokens to early backers. This forces projects to debut on exchanges at prices above their cost to avoid backlash from community members and key opinion leaders (KOLs).
Notably, platforms such as Bybit are set to introduce new coin offerings, calculating projected opening prices based on annualized returns. Users are expected to favor projects with an annualized rate exceeding 40% and a single income of 1-2%. As a result, exchanges tend to prioritize projects with high market caps for their initial .
Smaller crypto projects with valuations under $100 million and minimal public offerings may experience less pressure, Dong suggested. However, even these projects are not entirely immune to market turbulence.
Institutional Shorting
Dong stated that it is not just retail investors engaging in shorting activities. Institutional players and token holders are also hedging against future losses by shorting newly listed currencies. This strategy aims to protect investments from plummeting token prices upon unlocks.
The analyst predicted that this coin cleansing will continue through the summer, potentially signaling the market’s recovery in late 2025 or 2026. He further warned that many venture capital funds could face dissolution due to poor returns and difficulties in securing additional funding rounds, leading to layoffs and salary reductions for investment managers.
“When this phenomenon occurs on a large scale, we may see the real bottom of VC coins,” Dong explained. He noted that excess returns from 2020 and 2021 brought a wave of external capital into the crypto market, leading to increased salaries and lavish perks for investment managers—a trend Dong predicted will soon reverse.
Crypto Market Sentiment
Bitcoin is currently trading at around $97,600, according to CoinMarketCap. The overall crypto market capitalization has fallen by 15% in the past 20 days, now standing at $3.19 trillion.
This slump comes as the Crypto Fear and Greed Index sits at 43, indicating fear among investors amid ongoing market uncertainty. Several crypto analysts, including BitMEX co-founder Arthur Hayes, have predicted the next few months as bearish for the crypto market.