The digital assets realm has predominantly transformed into a playground for well-financed institutional investors, commonly referred to as venture capitalists (VC), who are often depicted as a “predatory” entity. Due to the Securities and Exchange Commission’s (SEC) ongoing crackdown on the cryptocurrency industry, projects supported by VCs may entail higher levels of risk.
Confidential documents uncovered by DL News in an exclusive article reveal the SEC’s focus on three crypto venture capitalists. While the specific targets were not disclosed, this report has triggered concerns across the entire market.
CryptoRank data obtained by Finbold within this context highlights certain cryptocurrencies with significant capitalization and VC support. As events unfold, investors are advised to exercise caution with these projects in the near future pending further information.
Generally, venture capitalists endorse cryptocurrency startups in their early phases in exchange for vested tokens. As these vested tokens gradually become available for sale, VCs can offload them on the open market, reaping profits at the expense of retail investors.
Cryptocurrencies with substantial VC funding and market cap
Eight cryptocurrencies have notably garnered significant funds in a single funding round. Notably, mid-cap tokens such as Terra Classic (LUNC), Flow (FLOW), and Secret Network (SCRT) have each secured up to $1 billion.
Additionally, five others feature in the top 30 by market capitalization, making them projects worth monitoring. These include Polygon (MATIC), Near Protocol (NEAR), Solana (SOL), Sui Network (SUI), and Avalanche (AVAX).
Over time, these cryptocurrencies have experienced substantial unlocking of vested tokens, leading to considerable selling pressure on retail players. With the SEC’s interventions, VCs now have heightened incentives to divest more of their positions.
Particularly, Solana and Sui are recognized for their highest monthly token unlocks to private investors. Meanwhile, Avalanche, Near, and Polygon are currently executing linear unlocks with a reduced impact on their market capitalization. SOL and SUI are also implementing daily linear unlocks through staking, contributing to increased supply inflation in the market.
Substantial demand could counterbalance elevated supply pressures
Nevertheless, recent occurrences may not exert an immediate influence on the prices of these cryptocurrencies. Despite encountering escalated selling pressure on the supply side, a surge in demand on the buy side could help sustain favorable performance.
For example, Solana has emerged as a standout performer in this cycle, while Raoul Pal predicts that Sui could become a prominent player following SOL’s success.
Conversely, Justin Bons has praised MultiversX (EGLD) as the “technological Holy Grail of crypto.” Intriguingly, EGLD received one-tenth of the private funding compared to its rivals, resulting in a lower market capitalization.
Despite the potential, investors and traders must familiarize themselves with the risks and market dynamics while navigating this VC-dominated terrain.
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