Former Goldman Sachs executive Raoul Pal believes a controversial altcoin sector is poised to outperform other crypto assets in the coming months.
Pal explains to his 1 million followers on social media platform X that the crypto world “hates” tokens with high valuations and low initial circulating supplies, otherwise known as low float/high fully diluted valuation (FDV) tokens.
The analyst notes that market disdain tends to cause low-float/high-FDV tokens to drop at least 70% from their initial float, as future unlocks are already priced in, even if most unlocks don’t trigger significant sell-off events.
“However, from this point on, supply is a “known, known” and therefore demand is the most important part of the equation…
If a token shows real growth in demand (even at an early stage), either due to network activity or even speculative interest, then demand will grow faster than supply for now and the number will increase.
With increasing demand across the crypto ecosystem as the Crypto Summer and Crypto Fall bull market phases set in (alt season), tokens that experience increasing demand but low supply due to low floats will be more asymmetric to the upside in a bull market.
Pal argues that these types of tokens are underrated because of their bad reputation.
“Any increase in demand can move them much more than anything else because of the dreaded float down that works in your favor. Don’t stay too long. I’ll think about it more, but from my experience in TradFi, this is the most likely outcome.”
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