The market for venture-backed cryptocurrency projects has significantly shifted this year, with more than 80% of tokens launched trading below their opening fully diluted valuations. Data from Memento Research revealed that out of 118 major token generation events in 2025, 100 of them are currently underwater, with the median token experiencing a 71% drop from its launch price.
The report highlighted that the trend of TGEs often signaling the top for projects has led to price discovery happening pre-TGE. This has resulted in a scenario where buying at launch means hunting for rare outliers while facing a median outcome of a 70% decline.
One of the key factors contributing to the drawdown is the distinction between market capitalization and Fully Diluted Valuation (FDV). Retail investors typically focus on the circulating float, which is a small percentage of tokens available for trading. However, the price of the float is increasingly influenced by the FDV, representing the project’s total value once all tokens vest.
The report noted a “low float, high FDV” model where projects launch with a small circulating supply but a massive total valuation, hitting a hard ceiling. Larger launches with high FDVs have seen significant drawdowns, with opening valuations set too high above fair value.
The liquidity vacuum in the market has also played a crucial role in the underperformance of tokens. A brutal macro environment, with the broader crypto market shedding trillions in value, has led to a tiered liquidity environment. Institutional allocators now have regulated, liquid avenues for crypto exposure, reducing demand for riskier assets.
Critics have raised concerns about the current crypto venture capital model, suggesting that the industry prioritizes extraction over value creation. Projects that raised too much money and pre-sold too many tokens are now facing consequences as the market punishes such behavior.
Looking ahead to 2026, issuers and investors must adapt to the changing landscape. Tokens must offer real utility and value, anchoring valuations to sustainable metrics. Issuers should target initial floats to deepen liquidity, while investors need to approach TGEs as earnings reports rather than lottery tickets.
In conclusion, the market dynamics have shifted significantly, requiring a new approach to token launches and investments. By aligning valuations with real value and focusing on sustainable growth, stakeholders can navigate the evolving landscape of venture-backed cryptocurrency projects in the upcoming year.
