Token Launches Struggle to Maintain Value as Institutional Investors Flock to Listed Crypto Companies

Research by DWF Labs has revealed a concerning trend in the cryptocurrency market. The study found that more than 80% of token generation events (TGEs) result in prices falling below their initial value within three months. This steep decline can lead to significant losses for early investors.

The report attributes this post-launch drawdown to various factors, including airdrops and early investor unlocks creating selling pressure. Institutional investors are increasingly turning away from token launches due to regulatory requirements and the desire for clearer ownership and disclosure. Listed crypto companies, on the other hand, offer reporting standards, governance structures, and legal claims that fit within institutional portfolio rules.

The trend is not necessarily an exit from the sector, but rather a rotation towards more established and regulated forms of investment. IPO raises have increased by 48 times year-over-year to $14.6 billion, while merger and acquisition activity has reached its highest level in five years at $42.5 billion.