This year's altcoin market has been extremely challenging. To understand what's going on, you need to look back a few years.

The frenzy of fundraising from 2021 to 2022 indeed spawned a large number of well-funded projects. These projects are now starting to issue tokens intensively, and the problems have followed—markets are flooded with countless tokens, but genuine buying interest is scarce.

The most painful part isn't just the oversupply itself. What's more troublesome is that the mechanism causing all this hasn't changed at all. Projects are still issuing tokens, regardless of whether their products have a market or a user base; issuing tokens has become a necessary path. As venture capital money dries up and primary market investments decline, teams start to see token issuance as their only fundraising method, or simply as a way to create exit opportunities for insiders.

The entire situation looks like a four-way loss game.

**Low Liquidity Trap**

Over the past three years, the industry has generally used a flawed approach: when issuing tokens, they keep circulating supply extremely low. Usually, only a small percentage—single digits—of tokens are released into the market, maintained artificially to keep the fully diluted valuation (FDV) inflated. This logic seems sound—less circulation, more stable prices.

The problem is, this low circulation state is destined not to last forever. As locked tokens are gradually unlocked, the supply curve begins to rise, and prices inevitably plummet. The result? Early believers end up holding the bag. Data shows that most tokens have never been in a good state since their launch.

The most insidious part is that this low-circulation mechanism creates an illusion—making everyone think they've gained an advantage, when in fact it's a complete trap. Investors believe they got in early and bought cheaply, project teams think they've stabilized prices by restricting circulation, early supporters and later investors all think their choices were wise. But when the supply is finally released, all illusions shatter.