Crypto Exchange List Continues: Why Newly Listed Tokens Continue Crashing

The new token list is similar to the steroid stock market. Without the traditional financial guardrail, prices will sway wildly and break in days, if not days. Binance Exchange is often a destination of choice for many of these tokens, offering traders the opportunity to chase high-risk bets and the sense of the next market.

However, a closer look at that list suggests that these opportunities are statistically bleak. Some analysts have argued that the odds are close to zero as most new binance lists follow a predictable pump and dump cycle and then there is no meaningful recovery afterwards.

This raises an important question. Is this the nature of today's market, or is centralized exchange actively promoting unsustainable speculation?

Recent Binan Stoken List

Many new token lists in centralized exchange follow a similar pattern. Prices will skyrocket within hours of the list, then crash quickly and stabilize at a low level.

This is a breakdown of all Binance's new list since the beginning of this year.

Layer (defi) – listed on February 11th, down 50% from listing.

TST (MemeCoin) – Listed on February 9th, down 80%.

Bella (L1 Blockchain) – listed on February 5th, down 38%.

Anime (Culture Coin) – Listed on January 22nd, down 74%.

Trump (Memecoin) – Listed on January 19th, down 82%.

Solv (defi) – listed on January 17th, down 78%.

Cookie (MarketingFi) – Listed on January 10th, down 74%.

AIXBT (AI) – Listed on January 10th, down 67%.

CGPT (AI) – Listed on January 10th, down 68%.

Bio (Biotech) – Listed on January 3rd, down 88%.

So far, thanks to a strong foundation and avid community, it appears that only Bellachine (Bella) has the opportunity to rebound. Kaito's fate (Infofi tokens listed on February 19th) also remains uncertain. However, the patterns repeat across all sectors (defi, ai, memecoins, biotech).

Related: Bibit exchange hacking, over $1.4 billion Steth moved

Is Binance's list unique and bad?

Some analysts claim that all new tokens are tied to pumps and dumps. However, recent lists on other exchanges suggest that this is not the case. For example, IP (Distributed IP Management) listed on gate.io on February 13th has since skyrocketed five times. Another example is hype. This was listed on Kucoin on December 7th and worked well.

In some cases, familiar pump and dump patterns will also appear when Binance lists tokens already traded on other exchanges. For example, CGPT has been trading since April 2023, but the January Binance list temporarily doubled its price before crashing below listing level.

Another example is CAT, which won 54% on Binance listing date on December 17th before collapsed 86%. Velo Token, which has been traded since 2022, jumped 147% to the Binance list on December 13th before losing 83%.

Interestingly, on February 18th, Kraken's Velo list had no major impact on prices.

Why does CEX token list pump and dump?

Several factors (loans or combinations) can explain the reasons for the newly listed token dump when starting trading in a central exchange.

The most obvious reason is that it provides an ideal exit opportunity for insiders and VCs. Without limiting restrictions, project supporters can quickly offload their holdings and cash out before actual market demand is formed. This could be a signal of a lack of long-term interest in the project or a lack of actual utilities.

Another contributor is limited initial supply and low liquidity. When tokens debut with limited circular supply, early buyers will quickly raise prices. In this case, the artificial rarity is set to disappear and the price is corrected as more tokens become available, such as team unlocking, best schedules, liquidity injections, and more.

Finally, hype and speculation may be overdesigned. Exchanges like Binance have a huge user base, and their brand recognition can create what is called the “casino effect.” There, traders are rushing to expect quick, explosive profits rather than sustainable value.

Also, at least in theory, exchanges can artificially inflate demand, leading traders to rush to buy at any price. Although there is no concrete evidence of such an operation, Binance has previously faced allegations of washing transactions and market production tactics designed to inflate demand and trading volume.

However, Binance itself emphasizes that there is a “robust market surveillance framework that identifies and acts on market abuse.”

Although the analysis of the recent listings mentioned above is not exhaustive, some exchange listing mechanisms suggest that short-term speculation for sustainable project growth. By prioritizing transaction volumes, exchanges benefit from the hype cycle, but this approach risks eroding user trust and eliciting regulatory scrutiny.

Centralized crypto exchanges are not the only player to burn hype around the launch of new tokens. Even Argentine President Javier Miley has recently been discovered to be doing the same thing. Additionally, some CEXs, like Binance, try to mitigate some of the risks by labeling new lists as “seed” investments and requiring users to recognize the high-risk nature.

This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph's views and opinions.