Crypto funds and market makers are securing tokens at steep discounts through private over-the-counter (OTC) deals, while retail traders absorb the market risks. These deals often involve purchasing tokens at around a 30% discount with a vesting period of three to four months. Institutional investors hedge their positions by shorting equal amounts in perpetual futures markets, which stabilizes their profits over time, potentially yielding annualized returns of 60%-120%. However, retail traders are left unaware of this hidden selling pressure and often face the consequences when the tokens unlock in the market. As institutional investors capitalize on favorable terms and lack the transparency customary in traditional finance, retail traders are vulnerable to price changes driven by these covert arrangements. While some argue for transparency in token deals and others suggest curbing secondary sales by VCs, the imbalance persists, making it vital for retail traders to recognize the hidden challenges in trading.

Source 🔗