New launches have become uninvestable, mostly due to the privatisation of price discovery and unhealthy inflated valuations from VC markets that ignore supply and demand. These market dynamics are possible to exploit by disreputable actors, and sophisticated market participants are increasingly using them to their advantage.

While FDVs are higher than years ago, popular and hyped new launches have always priced the FDV of tokens within the top valuations of the market. This has been the case for at least the last 5 years — and this is mostly due to the privatisation of the price discovery. 

The “upside” captured by projects like Avalanche and Solana since their launches were: 

1. Partially driven by overall market returns.

   1. Avalanche’s performance since it’s public market debut until today is ~7x whereas Ethereum is around 9x on the same timeframe.

2. But also driven by additional repricing from their position within the market. 

   1. Solana moved from top 25 to top 5, creating a significant repricing vs ETH and rest-of-market.

   2. Avalanche moved from top 15 to top 10 before moving back down, causing a temporary repricing vs ETH (and rest of market) during the bullrun, which has since been erased.

When evaluating the upside in new tokens, token buyers should consider both the new token’s FDV vs. the rest of the market — but also the trajectory of the overall market. 

If a new launch’s valuation places it in the top 3 of all coins in existence then for this investment to perform well the investor would need a large market-wide expansion, and for the project to retain it’s status in the top 3, since it does not have much room to grow relative to the market.

If a new launch’s valuation places it in the top 30, and an investor believes it to be a top 10 project, then a low float and higher FDV would perhaps hold less importance when evaluating the token.

While a launch at 10bn seems expensive today — if Solana is at $1000 and worth $1 trillion in a couple of years, then yeah maybe $10bn will look cheap in hindsight, and people will be complaining that new launches are all at $80bn.

Judging new token launches by the first couple of months performance can also be a red herring – Solana dropped 50% from listing price and didn’t recover to it’s initial price for a couple of months. It took the inflows of new capital in the bullrun for Solana to reprice it’s position in the market.

Significant early market repricings are unlikely without an ongoing market-wide trend, since a) private markets extract the upside b) it’s difficult to fight market forces to underprice something in a high-demand market, and c) it is possible for projects, exchanges and market makers to fight market forces to overprice something if the float is very low.

Market participants should expect that new launch valuations remain high while the market is in demand. It is no longer possible to be “early” in the privatised-gains meta — instead investors should focus on finding value in the market that others have forgotten, or has become mispriced and out of favour.

Token buyers should aim to become more sophisticated at evaluating the valuation and supply/demand dynamics of new tokens, identifying which high FDVs are based in supply/demand realities, and which have extremely dislocated phantom markets.

Opting out of participating in these markets is voting with capital.

Good founders want to build successful projects and they know that market dynamics will interact with their project’s perception. Memecoin over-performance and new token launch under-performance has caused readjustments in fundraising and launch plans for future founders.

New launches have become uninvestable, mostly due to the privatisation of price discovery and unhealthy inflated valuations from VC markets that ignore supply and demand. These market dynamics are possible to exploit by disreputable actors, and sophisticated market participants are increasingly using them to their advantage.

While FDVs are higher than years ago, popular and hyped new launches have always priced the FDV of tokens within the top valuations of the market. This has been the case for at least the last 5 years — and this is mostly due to the privatisation of the price discovery. 

The “upside” captured by projects like Avalanche and Solana since their launches were: 

1. Partially driven by overall market returns.

   1. Avalanche’s performance since it’s public market debut until today is ~7x whereas Ethereum is around 9x on the same timeframe.

2. But also driven by additional repricing from their position within the market. 

   1. Solana moved from top 25 to top 5, creating a significant repricing vs ETH and rest-of-market.

   2. Avalanche moved from top 15 to top 10 before moving back down, causing a temporary repricing vs ETH (and rest of market) during the bullrun, which has since been erased.

When evaluating the upside in new tokens, token buyers should consider both the new token’s FDV vs. the rest of the market — but also the trajectory of the overall market. 

If a new launch’s valuation places it in the top 3 of all coins in existence then for this investment to perform well the investor would need a large market-wide expansion, and for the project to retain it’s status in the top 3, since it does not have much room to grow relative to the market.

If a new launch’s valuation places it in the top 30, and an investor believes it to be a top 10 project, then a low float and higher FDV would perhaps hold less importance when evaluating the token.

While a launch at 10bn seems expensive today — if Solana is at $1000 and worth $1 trillion in a couple of years, then yeah maybe $10bn will look cheap in hindsight, and people will be complaining that new launches are all at $80bn.

Judging new token launches by the first couple of months performance can also be a red herring – Solana dropped 50% from listing price and didn’t recover to it’s initial price for a couple of months. It took the inflows of new capital in the bullrun for Solana to reprice it’s position in the market.

Significant early market repricings are unlikely without an ongoing market-wide trend, since a) private markets extract the upside b) it’s difficult to fight market forces to underprice something in a high-demand market, and c) it is possible for projects, exchanges and market makers to fight market forces to overprice something if the float is very low.

Market participants should expect that new launch valuations remain high while the market is in demand. It is no longer possible to be “early” in the privatised-gains meta — instead investors should focus on finding value in the market that others have forgotten, or has become mispriced and out of favour.

Token buyers should aim to become more sophisticated at evaluating the valuation and supply/demand dynamics of new tokens, identifying which high FDVs are based in supply/demand realities, and which have extremely dislocated phantom markets.

Opting out of participating in these markets is voting with capital.

Good founders want to build successful projects and they know that market dynamics will interact with their project’s perception. Memecoin over-performance and new token launch under-performance has caused readjustments in fundraising and launch plans for future founders.