Institutional Investment Key to Success for New Tokens in 2024

New
tokens
launched
in
2024
have
largely
struggled
to
replicate
the
success
of
their
predecessors.
However,
institutional
investment
has
emerged
as
a
crucial
factor
for
the
success
of
certain
tokens,
according
to

Cointelegraph.

The
Current
Market
Landscape

The
market
capitalization
of
all
fungible
tokens
stood
at
over
$2
trillion
as
of
September
16,
2024.
Among
these,
altcoins—cryptocurrencies
other
than





Bitcoin
(BTC)
and
Ethereum
(ETH)—have
seen
a
combined
market
value
increase
of
around
$240
billion
over
the
past
year.
Despite
this
overall
growth,
most
new
tokens
launched
in
2024
have
performed
poorly,
failing
to
gain
significant
traction.

The
primary
reason
behind
this
underperformance
is
the
sheer
number
of
new
tokens,
which
has
diluted
the
market’s
attention.
The
total
number
of
altcoins
increased
by
107%
over
the
past
year,
from
1.69
million
in
August
2023
to
over
3.5
million
today.
In
contrast,
the
global
crypto
user
base
grew
by
only
33%,
from
420
million
to
562
million
people.
This
disparity
has
resulted
in
fragmented
liquidity
and
weak
price
performance
for
individual
altcoins.

Institutional
Investment
as
a
Game
Changer

Tokens
that
have
managed
to
perform
well
in
2024
generally
have
significant
institutional
interest
from
liquid
funds.
Unlike
venture
capital
firms
that
invest
at
the
startup
stage,
liquid
institutional
investors
invest
via
the
open
market,
which
can
have
a
notable
impact
on
an
altcoin’s
performance.
Tokens
such
as
TON
(TON),
SOL
(SOL),
XRP
(XRP),
BNB
(BNB),
ADA
(ADA),
TRX
(TRX),
AVAX
(AVAX),
SUI
(SUI),
and
MOCA
have
shown
better
performance
due
to
institutional
support.

This
institutional
backing
helps
altcoins
stand
out
in
a
saturated
market,
instilling
greater
confidence
among
retail
investors.
Institutions
focus
on
long-term
prospects
rather
than
short-term
gains,
which
can
bring
improved
attention,
focus,
and
liquidity
to
these
altcoins.

Room
for
More
Institutional
Investment

There
is
significant
potential
for
increased
institutional
investment
in
the
crypto
market.
Institutional
investors
dominate
the
US
equity
market,
holding
80%
of
the
large-cap
S&P
500’s
market
capitalization.
However,
their
presence
in
the
Web3
market
is
still
relatively
low
and
concentrated
mainly
on
Bitcoin.

As
of
June
2024,
77%
of
institutional
asset
managers
had
allocated
only
5%
or
less
of
their
funds
to
cryptocurrencies
and
related
assets.
This
highlights
both
the
need
and
the
opportunity
for
Web3
to
foster
a
more
balanced
market,
where
institutional
holdings
could
reach
around
50%.

Greater
institutional
participation
could
introduce
substantial
new
long-term
capital
and
engender
greater
trust
in
Web3
projects.
Projects
capable
of
attracting
institutional
interest
will
stand
out
in
this
crowded
market,
providing
a
pathway
to
overcoming
the
problem
of
attention
dilution.

Yat
Siu,
a
guest
columnist
for
Cointelegraph
and
co-founder
of
Animoca
Brands,
emphasized
the
importance
of
institutional
support
for
Web3
projects.
Animoca
Brands
has
been
actively
involved
in
providing
such
support,
participating
in
initiatives
like
the
Hong
Kong
Monetary
Authority’s
stablecoin
issuer
sandbox
and
investing
in
projects
like
TON
and
Mocaverse.

With
the
current
market
dynamics,
altcoins
with
solid
institutional
appeal
and
capability
stand
a
far
greater
chance
of
success.

Image
source:
Shutterstock