In the last half-year, a notable trend has emerged among the newly introduced cryptocurrencies on Binance, the leading digital asset exchange globally. These tokens have experienced substantial declines in their value post-listing, prompting concerns among potential investors seeking to diversify into emerging digital assets.

A recent examination conducted by the anonymous crypto analyst Flow on X highlighted a concerning statistic: out of the 31 tokens scrutinized, only a mere five have shown positive growth. Notable performers include meme coin (MEME), Ordi token (ORDI), Jupiter based on Solana (JUP), Jito (JTO), and Dogwifhat (WIF). Of these, the Ordi token stands out, achieving an impressive surge of over 261% since its introduction, despite lacking the support of venture capitalists. Following closely behind is Dogwifhat, which experienced a notable 117% increase.

Flow's analysis shed light on the prevalent trend where the majority of new tokens listed on Binance are endorsed by prominent venture capitalists and debut at inflated valuations. The average fully diluted valuation (FDV) at the time of listing on Binance surpasses $4.2 billion, with some tokens even exceeding $11 billion. However, many of these projects lack substantial user bases or a thriving community, casting doubts on their long-term sustainability.

Furthermore, Flow's findings indicate that if an investor had evenly distributed investments across all new Binance listings in the past six months, their portfolio would have suffered a decline exceeding 18%. This suggests that a significant portion of tokens launched on Binance may not offer promising investment opportunities, as their growth potential appears to have been exhausted prematurely. Instead, these tokens seem to serve as a means for insiders to capitalize on the limited access of retail investors to early-stage investments.

In alignment with economist Alex Kruger's earlier observations, Flow criticized the prevailing market dynamics where numerous tokens are structured to experience rapid price surges followed by sharp declines. This phenomenon is often attributed to short vesting schedules, falsified metrics, and exaggerated claims regarding user acquisition, creating an environment conducive to pump-and-dump schemes.

The detrimental impact of the current token launch strategy on the crypto market is a focal point of Flow's argument, advocating for a paradigm shift in approach. Launching tokens with inflated fully diluted valuations (FDVs) not only erodes their intrinsic value but also diminishes market interest, leading to a downward spiral in token prices. This detrimental practice not only harms individual tokens but also tarnishes the reputation of the entire cryptocurrency sector.

Flow referenced a prior analysis by Crypto_McKenna, who criticized the practice of pressuring protocols to debut at elevated FDVs to benefit early-stage investors. McKenna highlighted the advantages of launching at lower valuations, enabling secondary market traders to capitalize on repricing opportunities, thereby fostering momentum and generating increased interest in the token.