Altcoins
VCs Hold 1,100% Gains on These Altcoins, But for How Long?
Venture capitalists have reaped huge gains on a select group of altcoins. However, recent indicators suggest that these investors may be considering selling their holdings soon.
This outlook highlights the need for cautious optimism among token holders. While decisions to hold or sell altcoins may have a significant impact on the overall profitability of these VCs, the ripple effect will likely extend to other investors.
High Exhaust Pressure: VCs Could Sell Altcoins With 1,100% Gains
Ethereum Naming Service (ENA), Renzo (REZ), Ondo Finance (ONDO), Dymension (DYM), Saga (SAGA) and Celestia (TIA) token holders may be treading on dangerous ground. Data platform Dune Analytics shows that VCs have an unrealized profit of 1,100% on these altcoins, creating high dumping pressure.
High exhaust pressure indicates strong sell sentiment in the market or perceived risks associated with altcoins. This could lead to losses for token holders as VCs reevaluate their investment strategies and consider rebalancing portfolios.
“There are better ways to make money in this market than waiting for the inevitable collapse of high-cap/low-market-cap FDV tokens,” said cryptocurrency researcher Emperor Osmo. warned.
In particular, since the exhaust pressure weighs heavily, they could diversify into other assets, adjust their risk exposure or implement hedging. These strategies, which would protect them from market downturns, could affect token holders who are not farsighted.
To know more: Best Cryptocurrencies to Buy Now: Top Coins to Watch in July 2024
VC Holdings. Source: Dune
BeInCrypto reached out to Hitesh Malviya, the founder of on-chain analysis DYOR platform, to discuss the different risk levels of VC-backed tokens. When asked about the tokens with the highest risk of a VC sell-off, Malviya pointed to AltLayer and Connext. On the other hand, he believes that zkSync and LayerZero are on a lower risk spectrum, suggesting that these tokens have a more stable investment base.
As an example of a token that has seen significant VC investment and suffered significantly after a sell-off, Malviya cites Dimo. Despite substantial support, Dimo remains underwater after the VC sell-off, serving as a warning in the volatile cryptocurrency market.
Venture capitalists flock to the hottest stories of 2024
A closer look at altcoins shows that they have participated in some of the hottest narratives in 2024. Among these, ONDO has been central to the Real World Assets (RWA) narrative, with Congress Meeting for Tokenization Talks. This year, the sector has attracted the attention of the general public. Cryptocurrency-focused firms, global bankers and asset managers like BlackRock are driving this interest.
Ethereum Name Service has also been a hot topic in 2024. The protocol allows humans to use easy-to-remember domain names for their cryptocurrency addresses. While the future of Web3 is taking center stage, ENSbuilt using Ethereum smart contracts, has seen increasing adoption. In tandem, Open interest in the token has risen to multi-year highs on Monday.
For REZ, a liquid staking token, interest in Renzo protocol increased after cryptocurrency exchange Binance added it to the Launchpool program. The staking narrative also played a role in Celestia, with the price of the TIA token reacting on major cryptocurrency exchanges Enabling Token Staking.
To know more: What are the best altcoins to invest in July 2024?
On the other hand, SAGA, a GameFi Layer 1 blockchain token, has come to the fore with tailwinds from a airdrop campaign involving partnerships with over 100 projects.
Infrastructure companies that attract the bulk of early-stage investment during the industry’s hot seasons make sense. While the hype around these Narratives ease, and with new themes coming in, VCs can identify interesting new projects to
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