The crypto exchange listing conundrum continues: Why newly listed tokens keep crashing

New token listings lucifer the banal marketplace connected steroids. Without the guardrails of accepted finance, prices plaything wildly, making—and much often breaking—fortunes successful days, if not hours. Binance speech is often the listing destination of prime for galore of these tokens, which connection traders high-risk bets and the accidental to pursuit the adjacent marketplace sensation. 

However, a person look astatine its listings suggests that these opportunities are statistically bleak. Some analysts reason the likelihood are person to zero, arsenic astir caller Binance listings travel a predictable pump-and-dump cycle, with nary meaningful betterment afterward.

This raises a cardinal question: Is this conscionable the quality of today’s market, oregon are centralized exchanges actively driving unsustainable speculation?

Recent Binance token listings

Many caller token listings astatine centralized exchanges travel a akin pattern. Prices skyrocket wrong hours of listing, past clang soon aft to stabilize astatine little levels.

Here’s a breakdown of each Binance’s caller listings since the commencement of the year:

• LAYER (DeFi) – Listed connected Feb. 11, dropped 50% from its listing high.

• TST (Memecoin) – Listed connected Feb. 9, dropped 80%.

• BERA (L1 Blockchain) – Listed connected Feb. 5, dropped 38%.

• ANIME (Culture Coin) – Listed connected Jan. 22, dropped 74%.

• TRUMP (Memecoin) – Listed connected Jan. 19, dropped 82%.

• SOLV (DeFi) – Listed connected Jan. 17, dropped 78%.

• COOKIE (MarketingFi) – Listed connected Jan. 10, dropped 74%.

• AIXBT (AI) – Listed connected Jan. 10, dropped 67%.

• CGPT (AI) – Listed connected Jan. 10, dropped 68%.

• BIO (Biotech) – Listed connected Jan. 3, dropped 88%.

BIO, SOLV, TRUMP 1-day terms charts. Source: Marie Poteriaieva, CoinGecko

So far, lone Berachain (BERA) appears to person a accidental astatine rebounding, acknowledgment to beardown fundamentals and an engaged community. The destiny of KAITO (an InfoFi token that was listed connected Feb. 19) besides remains uncertain. But crossed each sector—DeFi, AI, memecoins, biotech—the signifier repeats.

Related: Bybit speech hacked, implicit $1.4 cardinal stETH moved

Are Binance listings uniquely bad?

Some analysts reason that each caller tokens are bound to pump and dump. However, caller listings connected different exchanges suggest otherwise. For example, IP (decentralized IP management), listed connected Gate.io connected Feb. 13, has since surged by astir 5x. Another illustration is HYPE, which was listed connected KuCoin connected Dec. 7 and performed well.

In immoderate cases, erstwhile Binance lists tokens that already are traded connected different exchanges, the acquainted pump-and-dump signifier emerges arsenic well. For instance, CGPT had been trading since April 2023, yet its Binance listing successful January concisely doubled its price—before crashing beneath pre-listing levels.

Another illustration is CAT, which gained 54% connected its Binance listing time connected Dec. 17 earlier collapsing 86%. VELO token, which traded since 2022, jumped 147% upon its Binance listing connected Dec. 13 earlier losing 83%. 

Interestingly, the VELO listing connected Kraken connected Feb. 18 had nary large terms impact.

VELO, CGPT, CAT 1-day terms charts. Source: Marie Poteriaieva, CoinGecko

Why bash CEX token listings pump and dump?

Several factors—alone oregon successful combination—could explicate wherefore recently listed tokens dump erstwhile trading begins astatine centralized exchanges.

The astir evident crushed is that they supply an perfect exit accidental for insiders and VCs. Without vesting restrictions, task backers tin instantly offload their holdings, cashing retired earlier immoderate existent marketplace request has a accidental to form. This could beryllium a awesome of the project’s deficiency of semipermanent involvement oregon immoderate existent utility.

Another contributing origin is constricted archetypal proviso and debased liquidity. When a token debuts with a restricted circulating supply, aboriginal buyers thrust prices up quickly. In this case, arsenic much tokens go available—whether done squad unlocks, vesting schedules, oregon liquidity injections—the artificial scarcity disappears, and the terms is acceptable to correct.

Finally, over-engineered hype and speculation could play a large role. Exchanges similar Binance person a immense idiosyncratic base, and their marque designation tin make what tin beryllium described arsenic a “casino effect,” wherever traders unreserved successful expecting speedy and explosive gains alternatively than sustainable value.

It is besides possible, astatine slightest successful theory, that exchanges tin artificially inflate demand, prompting traders to unreserved successful and bargain astatine immoderate price. There is nary factual grounds of specified manipulation, but Binance has antecedently faced allegations of lavation trading and market-making tactics designed to inflate request and trading volume.

Binance itself, however, emphasizes that it has a “robust marketplace surveillance model that identifies and takes enactment against marketplace abuse.”

While the supra investigation of the caller listings is acold from exhaustive, it suggests that immoderate exchanges’ listing mechanics favour short-term speculation implicit sustainable task growth. By prioritizing trading volume, the speech benefits from the hype cycle, but this attack risks eroding idiosyncratic spot and drafting regulatory scrutiny. 

Centralized crypto exchanges are not the lone subordinate fueling the hype astir caller token launches. Even the Argentine president Javier Milei has precocious been spotted doing the same. Additionally, immoderate CEXs similar Binance bash effort to mitigate immoderate of the risks by labeling caller listings arsenic “seed” investments and requiring users to admit their high-risk nature.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.