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Opinion: Excessive New Project Tokens Lead to Sharp Drop in Altcoins Due to Market Makers Selling Off Instead of Providing Liquidity

Summary: In a recent tweet, Mango Labs founder Dov (@dov_wo) stated that most market makers are not providing liquidity but acting as market takers, only passively selling off orders and rarely placing limit orders. They continuously sell off chips to retail investors using a time-weighted average strategy from the opening, without controlling the market. A new ...

In a recent tweet, Mango Labs founder Dov (@dov_wo) stated that most market makers are not providing liquidity but acting as market takers, only passively selling off orders and rarely placing limit orders. They continuously sell off chips to retail investors using a time-weighted average strategy from the opening, without controlling the market. A new token typically stops providing liquidity after about a week, waiting for the project team to propose termination.

Dov explained that this situation arises from an excess of industry projects and liquidity having a cost. Market makers sell off continuously after opening to wait for the next token project to launch, as the first week of each project is the most profitable. Therefore, many altcoins experience a 70%-80% drop in the early morning with just tens of millions of dollars in trading volume.

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