<h3 id="in-this-article-we-will-take-a-detailed-look-at-the-impact-of-listing-on-the-token">In this article, we will take a detailed look at the impact of listing on the token</h3>
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<h3 id="strong-what-is-a-listing-on-an-exchange-strong">What is a listing on an exchange?</h3>
When a digital currency or token is listed on a cryptocurrency exchange, it becomes accessible for trading and investment activities by users, enabling them to buy or sell as they please. The liquidity of the token invariably sees a surge, particularly if the exchange where it's listed has a substantial user base.
In addition to this, the act of listing carries significant marketing weight. When a novel token is introduced to the exchange, an official announcement is typically made. This event is frequently covered by various news outlets, thereby serving as a marketing tool for the team behind the token, helping to generate interest and awareness among potential investors and existing token holders.
<h3 id="strong-why-list-on-the-stock-exchange-strong">Why list on the stock exchange?</h3>
Suppose we've established a blockchain project and launched our distinctive token using the Ethereum (ERC-20) platform. We've executed an ICO (Initial Coin Offering), selling tokens to investors and accumulating $25 million in the process.
Now, the onus lies on us to establish the legitimacy of our project, assuring our investors that we aren't perpetuating a fraud. Typically, this can be achieved by launching a functional blockchain product, thus substantiating the value of our token. However, our product is still under development and can't be introduced yet.
As time elapses post-ICO, the scepticism amongst investors and the broader community intensifies. They desire confirmation that their investments aren't worthless – that what they bought holds real value and can be traded in the market at will. If investor confidence continues to dwindle, the project risks an untimely demise. To mitigate this, we must generate value for our token by instigating supply and demand. This can be done by introducing it to the market, which can be facilitated through an exchange. Hence, we aim to list our token on as many exchanges as possible.
It's customary for a nascent project to opt for several smaller exchanges along with one from the top 10. The rationale is that the listing fees on exchanges are substantial, and larger exchanges tend to demand higher fees. It wouldn't be practical to exhaust our funds by aiming for listings on major exchanges right from the outset.
For more details about the selection process and regulations of crypto exchanges, you can read the<a href="https://hackernoon.com/beginners-guide-to-listing-your-crypto-token-on-an-exchange" rel="noopener noreferrer nofollow"> linked article</a>.
<h3 id="strong-the-impact-of-listing-on-the-price-of-a-token-strong">The impact of listing on the price of a token.</h3>
Generally, the price of a token doesn't begin to respond to its exchange listing at the onset of trading, but at the point when the news is published.
A study carried out by eToro and The TIE, utilizing 2020 data, found an interesting pattern. Cryptocurrencies that were listed on Coinbase and had an announcement made before the actual listing, witnessed an average price surge of around 50%.
There was often a six-day interval between announcements and when the respective assets became available for trading on the platform. Each asset saw an average price increase of 43% between the announcement and the actual listing, with an additional 7.5% increase on the listing day itself. However, prices typically fell during the day. A similar trend was observed at Binance.
Take, for example, Everipedia's (IQ) listing on Binance. This event led to an 85% price surge for the IQ token.
However, it doesn't always result in a token price increase. If the first listing takes place soon after the ICO, some investors who participated at the pre-ICO or ICO stage might want to realize profits. Large-scale sell-offs could potentially bring about a price drop unless there are enough willing buyers to absorb the tokens being sold.
One case in point is the listing of the KyberNetwork (KNC) token on Binance, which was its first exchange after the ICO. The KNC token experienced a downward trend for several months following its debut on the exchange.
<h3 id="strong-how-does-delisting-affect-the-cost-of-the-cryptocurrency-strong">How does delisting affect the cost of the cryptocurrency?</h3>
The journey to public trading is only half the battle. Remaining listed is equally crucial. Various reasons can prompt large exchanges to delist projects. Let's explore the main causes and their impact on token prices.
Insufficient Trading Volume
When traders or investors lose interest in a particular token or coin, it subsequently loses relevance to the crypto exchange. This is because trading commissions form a substantial part of an exchange's revenue, and low trading volumes lead to insignificant commission amounts.
For instance, in February 2019, Binance delisted the CLOAK token due to a significant drop in its trading volume. Despite a peak capitalization of $154 million in December 2017, Cloakcoin lost 98% of its value after the crypto market plummeted in early January 2018. By July 2019, even Bittrex had delisted it when the daily trading volume for the BTC/CLOAK pair on the YoBit and BitRabbit exchanges was less than $10.
Scandals Involving the Project Team
Exchanges reserve the right to sever ties with a cryptocurrency project and delist its token if the project gets embroiled in controversy.
In 2016, BitConnect, a crypto startup, had a market capitalization of $2.55 billion and a token price reaching up to $460. However, amidst allegations of fraud and a suspiciously-timed hacking incident that coincided with legal proceedings, the BCC price plummeted to $10 within days, prompting exchanges to delist the token.
Low Market Capitalization
Crypto exchanges periodically evaluate the performance of the tokens listed on their platforms and cull the underachievers.
In the summer of 2019, Bittrex delisted eight cryptocurrencies at once (MUSIC, ABY, etc.), followed by nine more. Most of these delisted tokens/coins failed to rank within the top 1000 on CoinMarketCap in terms of capitalization and had been underperforming for a significant period. Such projects usually trade on one or two exchanges, so delisting can drastically affect the price.
Anonymous Coins
Cryptocurrency exchanges keep a close eye on regulatory news and often comply with stipulations to avoid complications.
Following the publication of cryptocurrency regulations by the Financial Action Task Force (FATF), which was recommended by member countries to enforce data storage and transfer requirements on crypto exchanges, OKEx delisted five privacy-enabling cryptocurrencies – DASH, Monero, Zcash, Horizon and Super Bitcoin – on October 10, 2019. They stated that these coins hampered data collection, warranting delisting. Similar actions were taken by Upbit and Coinbase.
<h3 id="strong-how-much-is-the-cost-of-listing-a-crypto-on-an-exchange-strong">How much is the cost of listing a crypto on an exchange?</h3>
To initiate the trading of a token or coin on an exchange, a listing fee must be paid. Think of it as an "entry fee".
The topic of listing fees is extensive enough to warrant its own comprehensive article, particularly given the rapid evolution of the crypto landscape.
Nonetheless, here are a few tips:
If a cryptocurrency project has raised a substantial amount during the ICO stage, then it would be logical to aim for a listing on a major exchange. However, if the funds raised are limited, spending all of them to secure a spot on a large exchange might not be the most judicious decision.
However, If your goal is to be listed anyway on reputable exchanges, you can seek assistance from specialized agencies like <a href="https://listing.help/" rel="noopener noreferrer nofollow">"Listing.Help"</a>. Collaborating with us allows for a quicker, smoother, and more economical listing process. Thanks to our special agreements with exchanges, we can offer prices that are significantly lower than the official rates.
<h3 id="strong-strategies-to-profit-from-crypto-exchange-listings-strong">Strategies to profit from crypto exchange listings.</h3>
Crypto exchange listings often lead to a change in a token's price, turning information on prospective listings into a potentially profitable commodity. But where can such valuable data be obtained?
Project's Communication Channels
The initial announcement of an impending listing often occurs through the official channels of the project – prominently via the community's Telegram chat. It is on these platforms that team members regularly divulge details about discussions with exchanges, listing terms, and associated costs. It's worth noting, However, that the names of the exchanges are typically kept confidential until the final stages.
Analysis of Blockchain Balances
Some crypto analysts employ blockchain to predict upcoming listings, capitalizing on the public availability of Bitcoin or Ether balances.
Project communities are typically aware of the wallets used to store the cryptocurrency accumulated during an ICO. The addresses of these wallets are entered into a Telegram bot to monitor any significant activity. If a transaction amount matches the listing cost, it indicates that a payment has been made. Consequently, it becomes clear that the token will soon be listed on an exchange, and the specific exchange can often be identified.
As for delisting, this information is usually available to exchange employees only. Often, project management isn't aware that their token is about to be withdrawn from trading. This was the case with the Mysterium (MYST) cryptocurrency.
When Bittrex announced MYST's delisting, numerous queries about the reasons and future plans were posed in the Mysterium Telegram chat. The administrators replied that they were uninformed about the delisting reason, and the exchange didn't respond to their inquiries.
<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/d62f62fa11cb4abba813c848ecea55f6.jpg">

In conclusion, if you want to list a token on an exchange but have a lot of questions about how this may affect your project in the future – feel free to contact our managers on the website <a href="https://listing.help/" rel="noopener noreferrer nofollow">Listing.Help</a> – We have extensive experience in such matters.
If you are interested in learning about cryptocurrencies and exchanges, then we invite you to visit <a href="https://listing.help/blog" rel="noopener noreferrer nofollow">our blog</a>, where you will find many related articles.

How exchange listings affect cryptocurrency prices?

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Sergei Khitrov

Other articles published on Jun 21, 2023

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