In this news:
Crypto is no longer a fringe internet experiment. It is showing up in retirement-account debates, Wall Street products, corporate balance-sheet discussions, political speeches and mainstream investment platforms.
That shift is bringing in new investors. Many stick to the largest and most established assets, such as Bitcoin and Ethereum. Others are venturing into less-established cryptocurrencies called “altcoins,” which have smaller market caps and are often far less battle-tested. These tokens can offer dramatic upside, but they also expose investors to markets that are much less mature than they may appear from the outside.
Unlike traditional equities, which are governed by strict rules around market making, insider trading and market manipulation, many altcoin markets operate in a much looser environment. Standards are less consistent, enforcement is more uneven, and investors often have limited visibility into the private arrangements that shape a token’s early trading conditions. That makes it easier for retail buyers to get burned by markets that look active and credible at launch but are actually fragile, distorted or dependent on incentives that can vanish quickly.
The crypto industry urgently needs more rigorous standards around market making and token launches. If new investors are routinely exposed to markets shaped by opaque incentives, short-term liquidity support, or outright manipulative tactics, the damage will extend far beyond individual losses. It will create a reputational problem for the entire industry that will be difficult to overcome.
How Altcoin Investors Get Burned
A new crypto token launches. The chart is moving. Trading volume looks active. Social media is buzzing. For an ordinary investor, it can feel like a strong market has formed.
Then the initial excitement fades. The buyers disappear. It becomes harder to sell without moving the price. The gap between the buy price and sell price widens. The market that looked deep and active turns out to have been thin and fragile.
This happens often in crypto, making altcoin investing feel uncomfortably close to a game of roulette. But the dynamic is rarely random. It is often tied to how a token’s market was secretly structured before public trading began, including the market-making agreements that shape early trading behavior.
What Is Market Making?
Every market needs buyers and sellers. In traditional finance, market makers help keep trading orderly by standing ready to buy and sell, narrowing the gap between what buyers will pay and what sellers will accept. In crypto, token projects often rely on market makers to help create functioning markets after launch.
At its best, this is a necessary and helpful service. A strong market maker can help reduce volatility, support more orderly price discovery, and make it easier for investors to enter or exit a position without dramatically moving the price.
But the details matter. Market-making agreements can include fees, token loans, options, trading obligations, incentive structures and other terms that ordinary investors never see. Those arrangements can determine whether early trading activity reflects real, durable demand or a temporary burst of liquidity engineered around the launch.
A token may appear healthy because there is visible volume and apparent buying interest. But if the market maker is operating under short-term incentives, weak obligations or a structure that allows it to sell large amounts of borrowed or discounted tokens as prices rise, the launch can create an illusion of strength. Retail investors see momentum, and soaring prices. Insiders and market participants see an exit window, and a chance to unload their holdings at a premium.
How Opaque Market-Making Deals Harm Investors
Altcoin projects rarely set out to deceive investors. Crypto founders generally do their best to avoid shady market makers and sign agreements that will ensure the longevity of their project. They are often very bad at this.
The problem for founders is that it is very difficult to separate a high-performance market maker from a shady operator. Historically, very little market-maker performance was made public—meaning projects have no way to judge a market maker based on prior performance.
Instead, founders are forced to choose a market maker based on reputation, introductions or referrals. They are forced to compare pitches from multiple firms, with no way to verify whether a proposal is realistic. Low-quality operators are able to consistently win contracts by submitting unrealistic bids and overpromising.
Other times, the problem is more deliberate. An altcoin project may accept a short-term market-making arrangement designed to create strong early trading conditions, knowing that the appearance of liquidity can attract investors and support a higher launch price. Founders don’t enter these agreements maliciously—they are usually betting that an early spike in popularity will help them find a long-term audience and maintain a stable token price.
However, often this bet doesn’t come through. Token prices often fall the second a market-making agreement expires, leaving early investors in the red.
In both cases, opacity is the core issue. Investors cannot see the market-making agreement. They cannot evaluate whether the firm supporting the token has a history of maintaining durable liquidity or simply creating launch-week activity. They cannot tell whether excitement around a token is organic or the result of a short-lived market-making arrangement.
Transparency Should Become New Standard for Token Launches
Projects should be expected to publicly disclose the basic terms of their market-making arrangements, including whether a market maker has received token loans, options, discounted allocations, trading incentives or other structures that could affect selling pressure after launch. Traders need to know whether the market they are entering is being supported by durable liquidity, short-term incentives or arrangements that could allow large holders to sell into public demand.
There are signs the industry is beginning to move in the right direction. More market makers are starting to publicize historical performance data, giving projects a clearer way to evaluate which firms have actually supported healthy markets across prior launches and which firms have relied on reputation, aggressive promises or short-term launch optics. That is a major step forward. If projects can compare market makers based on evidence rather than anecdotes, the highest-performing firms will win more business, and lower-quality operators will find it harder to hide behind polished pitches.
But performance transparency should be only the beginning. The next step is disclosure around the agreements themselves. Investors deserve to understand the incentives driving a token’s early market.
Crypto has spent years asking the public to believe that it is building the future of finance. If it wants mainstream trust, it needs to meet a basic standard of credible markets: Investors should know what forces are shaping the price before they are asked to buy.
Shane Molidor is the founder and CEO of Forgd, a Web3 investment bank and advisory optimization platform that provides seamless access to essential tools for blockchain projects.
.png)
