An examination of the recent tokenomics data reveals a disturbing trend. The tokens with the most substantial increases in their circulating supply over the past 30 days have, without exception, underperformed.

While we have seen supply expansions that are nothing short of astonishing—some tokens saw their supply rise by more than 70%—the market has reacted with a resounding shrug, sending prices down and not coming close to absorbing the additional float.

The information sheds light on a persistent problem in the cryptocurrency world: even eminent digital currencies seem unable to keep their prices stable under the deluge of new coins and freshly unlocked tokens that is now hitting the market. If anything, the recent price action confirms that the market’s inability to absorb all of this new product is keeping the prices of even the most famous tokens firmly in the doldrums.

Emissions Outpace Demand as Supply Grows up to 72%

Data from Tokenomist show that outstanding supply for many tokens has seen real growth over the past 30 days. They also show that these growth rates are significant, ranging from 25% to a staggering 72%. They also indicate that other tokens are doing this same thing. And they were doing it before too. So, these are not new tokens; these are old tokens that are now (ostensibly) being actively used in services.

Still, the momentary increase in liquidity has not propelled the much-needed recovery in crypto prices. Hence, the Capital has increased working liquidity almost to a point of saturation. And because most tokens have not seen significant metabolism in their market cap since the Oct. drop, we can infer that this additional working liquidity is being met with either a lack of selling pressure from the demand side or with actual selling by those who have something to sell. No investor should take this state of affairs as a positive sign.

The performance charts show a clear result: all tokens with the highest supply increases saw their prices fall over the 30-day period. This is data we can count on because it confirms a well-known but sometimes overlooked principle in token economics: if you emit a lot of tokens without having the market’s attention, you can quickly lose your tokens’ value.

Price Action Fails to Reflect Float Expansion

Even though new tokens have started circulating, the price actions of the affected projects have been negative. This highlights the disconnect between the availability of tokens and investor sentiment. More available tokens do not seem to equate to more interest or utility in the projects doing the token-issuing.

It seems that market participants are treating these tokens, which are heavy in emissions, with a degree of caution. We are witnessing consistent price declines across several of these projects, which suggests that investors are pricing something into these assets. What that something is, isn’t exactly clear; but it seems that investors are not willing to hold onto assets that are facing massive supply inflation and are likely to be diluted in the future.

This reflects a far more sophisticated grasp of tokenomics in today’s market. Investors have stopped being little more than hype-driven automatons and are actually thinking about the kinds of things that can make a token good or bad over the long haul: utility, user demand, and, crucially, the nature of supply increases. If something has a lot of supply increasing and it doesn’t have real utility or user demand backing it, that’s increasingly seen as a bad and potentially dangerous sign.

This dynamic sharply opposes past bull market cycles when token unlocks were frequently ignored—much to the detriment of unsuspecting buyers—in favor of trading that was merely driven by momentum. Nowadays, it feels as if our market’s sensitivity to emissions and supply overhangs has been turned up to 11, especially as our current liquidity conditions have tightened and capital in general has become more selective.

Lessons for Projects: Mind the Emissions Curve

The data offers a cautionary tale for token projects trying to strike the delicate balance between rewarding early stakeholders and maintaining long-term token value. Emissions can be an effective tool to bootstrap ecosystem activity, but badly timed or too-generous unlocks can flood the market, kill price growth, and undermine community trust.

Development with clear emission intentions should create smarter vesting schedules, work on demand-side strategies, or establish utility-based token sinks that will reduce the number of circulating tokens. Otherwise, the current market is proving the very opposite of effective.

Investors are also becoming more selective. They have unprecedented access to data and are using it much more effectively. They certainly are not using it any less. What was once the domain of a few select analytic firms is now the playground of a multitude of tools and services. Token unlocks and emissions are being tracked much more closely and, dare I say, much more intelligently than ever.

This better access and this better usage of data is certainly having and will continue to have a profound effect on how these assets are valued and how they cycle in and out of the market. And tokenomics—and this entry in the Tokenomics 101 series, in particular—plays a significant role in that discussion.

Conclusion

The past 30 days have demonstrated that simply upping supply doesn’t result in a market performance that’s resilient—in fact, it often seems to signal the exact opposite. If demand or use isn’t growing in step, then tokens with a large emissions footprint seem to be more likely to make a failed attempt at a comeback than to reap the rewards of a successful market. As the crypto landscape grows up, both the projects and the investors in them seem intent on walking this reality a little closer to the chest.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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