When a project with $10 million in financing reaches a circulating market value of $10 million, what will happen to exchanges, VCs, and retail investors?
Written by: Bright, Foresight News
At 0:00 on April 2nd, Binance Wallet launched its seventh exclusive TGE activity for PumpBTC (PUMP).
Compared to the previous Binance Wallet TGE project KiloEx, PumpBTC's new token window was only 45 minutes and not "friendly" to the East Asian time zone. However, at 0:45 on April 2nd, the PumpBTC TGE activity ended, with a total of 406,023 BNB invested, which was 327.56 times oversubscribed.
However, PumpBTC's token performance could be described as a "disaster". At 0:45, PumpBTC's on-chain opening price was $0.1893. By 0:55, the price had dropped to $0.1212. Ten minutes later, it fell to $0.0688. According to Dex Screen, at the time of writing, Pump's price was $0.047, with the lowest price reaching $0.03907, corresponding to a circulating market value of $11.3 million.
Assuming calculation at the lowest point, each Binance Wallet account that filled 3 BNB could only sell for $14.43. Without considering BNB purchase wear and gas fees, the net profit for a 3 BNB account was only $8.8, truly returning to the value of a real-world pork knuckle meal. Such limited profit space meant that users participating in the new token offering could not make even the slightest error in hedging BNB or on-chain lending, or they would fall into an awkward "anti-harvesting" situation. Combined with the "continuous decline" of previous Binance new token projects, various accusations about Binance launching garbage projects, malicious token dumping by project parties, and market maker price manipulation were rampant in public opinion.
In fact, taking PumpBTC as an example, it is not a worthless "air" project. As a Bitcoin liquidity staking platform, PumpBTC's official announcement of a $10 million seed round was led by SevenX Ventures and Mirana Ventures, with participation from VCs like UTXO and Mantle Ecosystem Fund. Since its launch in July 2024, PumpBTC has been deployed on over 10 public chains, with a total lock-up volume of 3,300 BTC (approximately $220 million), and has collaborated with over 70 projects, aiming to build a multi-chain ecosystem BTC-Fi and create a CeDeFi BTC liquidity vault.
So why do newly launched projects continue to fall, giving everyone the impression of "endless bottom-fishing"?
Crypto Valuation System is in the Early Stages of Reconstruction
The private capital market always oscillates between excess and scarcity of liquidity. When liquidity is abundant and external capital rushes in, market FOMO emotions will push prices higher. This newly acquired liquidity will make investors take on more risks, thereby driving the birth of new projects. When asset prices rise, investors will shift funds to earlier applications, hoping to obtain returns higher than benchmark assets like Bitcoin and Ethereum.
The crypto industry is facing the aftermath of excessive liquidity, with the 2021 "all coins pumping" being the best explanation of a financially liquid market, where VC fundraising from LPs was also extremely exaggerated. In the crazy investment wave of "ALL IN WEB3", as long as the project team threw out a novel (or even seemingly novel) concept and had the endorsement of a well-known VC, they could easily obtain high valuations in the secondary market, attracting numerous investors to pour in substantial funds. This may be the "Pandora's box" that led to the continued misalignment of valuations for new projects in the crypto industry.
Unfortunately, we are currently in a period of tight liquidity. Typically, the crypto market's liquidity follows Bitcoin's halving cycle. However, in 2024, when Bitcoin ETF fund inflows and traditional capital led by MicroStrategy become Bitcoin's supply "reservoir", small Altcoins have not received liquidity benefits, which may be related to the actual application of Altcoins not meeting market expectations.
Subsequently, the on-chain MEME trend further dispersed market attention with new assets issued in a single day. When issuing MEME brings more financial returns than building actual applications, the existing valuation system collapses. The valuation premium mismatch between exchanges, VCs, and project parties relative to retail investors has disappeared. Even though the MEME trend has died down, the market has been desensitized to the VC model of creating concepts and issuing tokens to harvest users over the past year, resulting in new projects failing to attract funds from market observers, let alone external capital.
Initiating Project PVP to Enable Capital PVE
In fact, when we begin discussing "fundamentals" and examining whether a project has real cash flow income, it indicates that the market has entered a stage that requires "recharging faith".
At this stage, expecting global markets to suddenly flood with liquidity to save one's positions is clearly unrealistic. Binance Wallet's continuous new token offerings may not be without the intention of accelerating bubble elimination. From the market's "takeover" enthusiasm during Shell to PumpBTC's dramatic fall, from hundred-USDT "pork knuckle meals" to hot meals in hand, capital allocators are continuously applying pressure to market liquidity and challenging the obviously inflated valuation system of new projects.
As Infini founder Christian said, "Without destruction, there can be no construction". The period of bubble rupture is torturous for gamblers and those wanting to quickly exit and seize wealth, but it is an excellent opportunity for investors to ambush resilient, high-quality projects at relatively low valuations, anticipating value leaps when liquidity returns.
The internet industry continued to thrive after de-bubbling because it filtered out market noise and garbage projects created by manipulation. The crypto industry may be experiencing a similar clearing moment. As liquidity dividends recede, MEME bubbles burst, and the cognitive gap between VCs and retail investors narrows, traditional valuation logic will no longer suffice. In the future, project value will return to real demand and long-term competitiveness, and the crypto market will necessarily establish a transparent, sustainable pricing mechanism - this is both a clearing of industry bubbles and a measure to screen truly "good" projects. Only by initiating project PVP based on technology, demand, and application can truly "killer" applications be created, thereby attracting external funds and initiating the next round of capital PVE.
