Digital assets have largely turned into a playground of well-financed institutional investors known as venture capitalists (VC), frequently labeled as a “predatory” force. With the continuous crackdown by the Securities and Exchange Commission (SEC) on the cryptocurrency sector, projects funded by VCs may present higher levels of risk.
In an exclusive article, DL News uncovered confidential documents indicating that the SEC is focusing on three crypto venture capitalists. Despite not disclosing the specific targets, this report has sparked concerns across the entire market.
CryptoRank data retrieved by Finbold within this framework highlights some cryptocurrencies with significant capitalization and VC backing. As developments unfold, caution is advised for investors in these projects in the immediate future pending further details.
Typically, venture capitalists sponsor crypto startups in their early stages in return for vested tokens. As these vested tokens gradually unlock, VCs can vend them on the open market, earning profits at the expense of retail investors.
Cryptocurrencies with substantial VC funding and market cap
Eight cryptocurrencies notably stand out for raising substantial funds in a single round. For instance, mid-cap tokens like Terra Classic (LUNC), Flow (FLOW), and Secret Network (SCRT) have each raised up to $1 billion.
Furthermore, five others rank in the top 30 by market capitalization, making them noteworthy projects to monitor. These include Polygon (MATIC), Near Protocol (NEAR), Solana (SOL), Sui Network (SUI), and Avalanche (AVAX).
Over the years, these cryptocurrencies have witnessed significant unlocking of vested tokens, leading to considerable selling pressure on retail participants. In light of the SEC’s actions, VCs now have added motivation to sell off more of their holdings.
Solana and Sui, in particular, are known for their highest monthly token unlocks to private investors. Concurrently, Avalanche, Near, and Polygon have ongoing linear unlocks with a lower impact on their market capitalization. SOL and SUI also feature linear daily unlocks through staking, contributing to higher supply inflation in the market.
Substantial demand could counterbalance elevated supply pressures
Nonetheless, recent events may not have an immediate impact on the prices of these cryptocurrencies. Despite facing increased selling pressure on the supply side, a surge in demand on the buying side could help sustain a positive performance.
For instance, Solana has emerged as a top performer in this cycle, while Raoul Pal believes that Sui could be the upcoming key player following SOL’s lead.
Conversely, Justin Bons has hailed MultiversX (EGLD) as the “technological Holy Grail of crypto.” Interestingly, EGLD received ten times less private funding compared to its competitors, resulting in a lower market capitalization.
Despite the potential, investors and traders must be well-versed in the risks and market dynamics while navigating this VC-dominated landscape.
Image Source: chayanuphol / Shutterstock
