Lack of Liquidity Hinders Token Issuance Plans
It is reported that although the prices of BTC and ETH have risen, some projects are delaying their token issuance plans due to lack of liquidity. According to…
It is reported that although the prices of BTC and ETH have risen, some projects are delaying their token issuance plans due to lack of liquidity. According to the data of CoinMarketCap, the number of new currency applications decreased throughout 2022, from 10264 in the first quarter to 6350 in the fourth quarter. With the collapse of the cryptocurrency exchange FTX and Alameda Research, this decline accelerated at the end of the year. Before bankruptcy, Alameda was one of the largest market makers, providing billions of dollars of liquidity for large and small tokens. So far this number is only 3000 applications.
Research: As the influence of Alameda continues to exist, more and more encryption startups delay the token issuance plan
Interpretation of the news:
The rising prices of Bitcoin (BTC) and Ethereum (ETH) are not enough to keep some projects from delaying their token issuance plans due to a lack of liquidity. As reported, fewer new currency applications were made in 2022 compared to the previous year. In the first quarter of 2022, there were 10,264 applications, but this number decreased to 6,350 in the fourth quarter. The decline accelerated towards the end of the year due to the bankruptcy of cryptocurrency exchange FTX and Alameda Research, one of the largest market makers that provided billions of dollars of liquidity for large and small tokens.
Before their bankruptcy, Alameda’s role as a market maker enabled them to provide large amounts of liquidity, which was critical to the smooth functioning of the cryptocurrency ecosystem. The sudden absence of liquidity providers like Alameda has made it harder for new token issuers to launch their projects. Even with the increasing prices of BTC and ETH, it is not enough to prop up new token issuers who require a minimum level of liquidity to execute trades.
Despite the growing interest in cryptocurrencies, the rate of new currency applications has significantly slowed down. CoinMarketCap recorded only 3,000 applications so far, a relatively small number compared to previous years. This trend raises concerns about the future of the cryptocurrency market and its ability to provide innovative solutions.
The lack of liquidity in the cryptocurrency market remains one of the primary causes of concern among investors and traders. Without enough liquidity, prices become more volatile, and trades become harder to execute. In this scenario, some projects will have no choice but to delay their plans until the liquidity situation improves.
In conclusion, the lack of liquidity is hindering token issuance plans and slowing down the cryptocurrency market’s growth. More market makers are required to provide the necessary liquidity needed for new token issuers to launch their projects. The cryptocurrency ecosystem must continue to innovate to address this challenge and sustain the momentum that the market has established.
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