HC Capital has reported that multiple coins crashed following their listing on the Binance exchange platform, raising questions in the crypto community.
The crypto community has expressed concern regarding the recent listings on Binance, the world’s largest digital asset trading platform by volume, as they have experienced substantial price drops from their all-time highs in a short period. This has sparked concerns among the holders of these tokens.
A few days ago, HC Capital, a crypto venture firm that specializes in the metaverse, Web3, and decentralized finance (DeFi) sectors, disclosed an assortment of digital assets that experienced a more than 80% decline in value following their listing on the premier crypto exchange on the social media platform X (formerly known as Twitter).
AEVO, PORTAL, STRK, SAGA, and DYM have all experienced a decline of over 80% from their all-time highs, as per HC Capital. However, AXL, MANTA, OMNI, PYTH, PIXEL, TNSR, and ALT have experienced a decline of over 70%. XAI, AI, BOME, WIF, JUP, METIS, REZ, and ETHFI, among other altcoins, have experienced a decline of over 60%.
It is important to note that Binance Labs, the venture capital arm of the crypto exchange, has invested in several of these initiatives, including AEVO. The crypto community is left pondering whether the price crash of these tokens is an inside job, as it is not uncommon to receive tokens in exchange for investments in the digital asset space.
CoinGecko data indicates that in the past 30 days, AEVO, STRK, SAGA, PORTAL, AXL, WIF, TNSR, and DYM have all experienced a decline of over 40%, while MANTA has experienced a decrease of approximately 25%. OMNI experienced an 18% decline, PYTH experienced a 31% decline, PIXEL experienced a 34% decline, REZ experienced a 28% decline, and AI experienced a 37% decline during the same period. Additionally, BOME, XAI, JUP, METIS, and ETHFI saw a 38% decline in the past 30 days.
HC Capital has also mentioned the following tokens: ZRO, RON, and NOT, which have experienced a decline of over 40% from their all-time highs, and IO and ZK, which have experienced a drop of over 30% from their all-time highs. TAO, ENA, and BB have experienced a decline of over 50% from their all-time highs.
Causes of the Crash
HC Capital observed that all of these tokens experienced a collapse after their Binance listing. These tokens are associated with various sectors, including artificial intelligence (AI), Layer 2, and Layer 3. Market volatility is one of the three primary factors contributing to their substantial decline from their all-time highs.
The crypto market is inherently volatile, and investors primarily wager on smaller altcoins due to the initial hype and speculation. Consequently, these altcoins achieve tremendous valuations that are short-lived. A comparable scenario was observed during the 2021 market bull run when tokens such as Decetraland (MANA) and The Sandbox (SAND) obtained exorbitant market capitalizations.
The low supply of these tokens is another factor contributing to the decline in their prices, which results in significant upward or downward movements in a short period. Lastly, HC Capital thinks that high fully diluted valuations (FDVs) also result in price corrections.
FDV encompasses the aggregate value of a cryptocurrency project, including all of its currently circulating tokens. The FDVs experienced a significant increase in value despite the limited supply and initial excitement, only to be subsequently devalued by market corrections.
