How to avoid the crypto death spiral.
Since the beginning of the financial markets, traders and investors have mostly paid attention to the price of their assets and hoped to see “green numbers”. Indeed, the pricing of a stock or a cryptocurrency is one of the most important metrics of any investment.
But what if only a couple of people were trading such an asset providing neither volume nor liquidity?
In that case - without any possibility to trade the asset - the price alone would be almost meaningless, being only an indicative metric for an OTC (Over The Counter) deal and its impermanent profit or loss.
On the crypto market - with so many different tokens and coins listed on tens of exchanges - lack of volume and liquidity is a common scenario. Tokens and cryptos might seem as if they could be easily traded, yet in reality the markets might struggle to trade even small amounts,? such as a few thousand dollars worth of coins. At the same time, most of the projects have pretty much the same token economy models, where large amounts of coins go to the market on a 30 - 90 days cadence, perpetuating an endless loop: first the market lacks buying power, then the early investors sell their tokens, as a consequence the token price goes down, so the buying power decreases, investors get scared, selling pressure increases, and the market goes down… until the end, when the project and its investors pull their hair while witnessing their assets becoming worthless.?
So, what is the most important metric to track in such a situation? The price?
For sure, but in second analysis the price is the precise projection of the downstream efforts in:
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When liquidity needs and the token volumes are supported by the carefully calculated moves of trading experts, the project’s team can focus on tech development and the expansion of the business. Investors that choose to exit their positions can do so without fear, confident that the token price will not be negatively impacted and crash. Surprisingly, even some of the top coins ranked on Coin Market Cap could use some market making support. Industry veterans like DWF Labs have been addressing this need with brilliant performances:
“One of the coins that we worked with ranked in the top100 on Coin Market Cap. The project wanted to sell its coins for US$10M”
shared Andrei Grachev, Managing Partner at DWF Labs
“but by doing so, the price would have crashed because of its market depth. We took this block of coins with a small discount and then handled their liquidation using our proprietary algorithm. As a result the project received the funds sought for further development without affecting their token price.”?
The crypto market offers plenty of opportunities, but the market is also riddled with traps. Through the choice of the right partners, deep research, accurate analysis, and dedicated work on each individual token metric, success is often the most likely outcome.
For more information on #web3 #crypto Market Making, Venture Capital, and OTC Liquidation visit the website: www.dwf-labs.com