The cryptocurrency market is similar in structure and functioning to the securities market: there are trading platforms – exchanges, coins and tokens – analogues of shares, as well as market makers and ordinary traders. Traditional companies place securities on the stock exchange to attract investments, and crypto projects conduct listings of digital coins.
However, there are nuances in the blockchain industry that everyone who wants to trade or invest in crypto must take into account. After reading this article, you will learn what a listing token is and how you can earn on it.
What is a listing?
Listing project tokens or coins on an exchange means adding them to the list of cryptocurrencies available for trading on the platform. For many blockchain startups, placing their currency (it is called native) on a top crypto exchange is becoming one of the most important criteria for further development. A successful start allows not only to draw attention to the project, but also to significantly expand the audience of its users, provide an opportunity for early investors to earn money and bring in new ones.
Here it is appropriate to return to the analogy with the stock market: a successful IPO (initial public offering) of a company on one of the world’s major stock exchanges will have a positive effect on the share price, which will increase the company’s capitalization. Investors, noticing the positive dynamics, will begin to invest in these shares, which will further increase capitalization. And the higher the company “worth” in the market, the easier it is to attract cheaper loans for development. At the same time, brand awareness and loyalty of potential customers is increasing.
In the cryptocurrency industry, listing a startup’s native currency on an exchange essentially performs the same function. A successful start ensures the rise in the price of the token by several times, which immediately attracts the attention of industry media and crypto forums. At the same time, early investors get the opportunity to make good money on their investments, and the project team gets free advertising and an influx of new users with serious money.
How to make money on a listing?
A good income on listing is the desire not only of the project team, but also of ordinary traders. Developers, as a rule, keep a part of the native cryptocurrency in a special fund – “cash”. The funds from it go to the development of the infrastructure of the token and directly to the payment of their labor. The more expensive the coin is, the greater the amount in fiat at the disposal of the developers. By selling part of the funds from this fund, the founders of a startup can make good money without having a significant impact on the course of their cryptocurrency.
Traders also have a chance to make a solid profit if they purchase tokens immediately after the start of trading or much earlier, having seen the potential of a new cryptocurrency. Here are a few examples of the rise in the value of coins shortly after the start of trading on a major exchange:
AAVEUP. On November 26, 2020, at the time of listing on Binance, trading started at 9.7 USDT (USDT is Tether stablecoin, 1 USDT ≈ $1). A week later, the price of the token reached 26 USDT.
D.F. Within a day from the start of trading, the price of the cryptocurrency increased from 0.000178 ETH to 0.00056 ETH. Or from $0.11 to $0.33 at the exchange rate at the time of listing on December 11–12 last year (1 ETH ≈ $600).
GRT. Trading started at 0.03 USDT per token. After 3 days, the price rose to 0.783 USDT — 260 times.
Of course, not all coins receive such a boost from listing. There are also examples of how early investors, immediately after the start of trading, began to sell the asset too actively, and its price fell rather than grew:
HEGIC. During the day, the price sank from 0.2811 BUSD (Binance’s own stablecoin, 1 BUSD ≈ $1) to 0.2 BUSD.
ROSE. On the day of listing, the price of the token fell by almost 3 times just a few hours after the start of trading.
How to find out about a future listing?
Placing a cryptocurrency on a top exchange is far from being such a simple procedure as it might seem at first glance. Large sites do not add everything to the list of assets in a row, but first they check applicants for compliance with internal criteria. At the same time, the evaluation criteria are not disclosed, as well as the price paid by developers for considering an application or issuing a listing permit.
According to rumors, adding a new cryptocurrency on one of the major exchanges costs about 10-20 bitcoins on average. According to the same unconfirmed information, the number 1 cryptocurrency exchange in the world, Binance, asks the most for access to its platform: from 250 bitcoins (more than $15 million!) And more. The second in terms of appetite is Huobi: here, developers will have to fork out “only” $1.5–2 million.
Even studying only open sources allows us to draw some conclusions about the parameters that exchanges pay attention to (other than money) when deciding to list a cryptocurrency.
Binance. Compliance with KYC / AML requirements by applicants, the real benefits of the project, popularity with the audience, cybersecurity.
Coinbase. Does it correspond to the declared values of the exchange, does it comply with legal requirements, how great is the market demand and supply, what will it bring to the industry.
Bitfinex. Project quality assessment, security audit, regulatory compliance, whether the source code is open.
Huobi. Startup strategic perspective, team, market activity, reliability, innovativeness.
In fact, the project team must prove to any exchange its value, reliability, safety and usefulness.
Due to the fact that the listing of a cryptocurrency on a top exchange, as a rule, increases the cost of coins many times over, the sites prohibit disclosing information about the date of such an event. Otherwise, the launch may be rescheduled or even canceled entirely. This is done in order to protect ordinary traders from speculative transactions by large players.
However, there are ways to be among the first buyers of a new asset. Firstly, it is necessary to monitor the resources that publish information about the nearest listings, taken from open sources. These are the services of Coinmarketcap, Coindar, Cryptonews, Coimarketcal and the official pages of exchanges. True, it is unlikely that it will be possible to find out about the most advantageous offers in less than a day or even after the fact.
Secondly, participation in airdrops (free distribution of crypto project tokens) in the hope that in the future the project will be listed on one of the top exchanges.
Another good option would be to buy cryptocurrency immediately after the start of trading on the exchange. After that, it is recommended to hold the purchased coins for 2-3 months. Usually, after the “swing” of the first days, the value of startup tokens with great potential grows. As an example, you can see how the price of the native currency of the projects mentioned earlier has changed:
AAVEUP – after 2 months, the token soared by 3,800%.
DF – 300% growth in 2 months.
GRT – plus 9 600% for the same period.
HEGIC – despite a 30% drop on the first day after listing, after 3 months the cost of the coin increased by 300%.
ROSE – 3 months after the unsuccessful start, the token not only returned the lost positions, but also grew by 20%.
Based on this information, the most appropriate strategy would be to:
Buying the currency of new projects immediately after adding them to the exchange.
Acquisition of a large number of coins for small amounts instead of investing the entire deposit in one project.
Wait for the rise in the price of your assets for a couple of months, along the way, tracking the news about the progress of these projects.
At the same time, one should not forget about monitoring the mood in the bitcoin market, because it is an indicator of the state of the entire industry. If the first cryptocurrency goes into a long fall, all altcoins will follow.
The topic of the listing will not be fully disclosed without mentioning the reverse process – the delisting of cryptocurrencies from the trading floor. As you may have guessed, this is the removal of the coin from the auction for some reason.
Here are the most common options for deleting a cryptocurrency by an exchange:
small trading volume. The coin is not interesting for traders, and if there is no trading, there is no income for the exchange from commissions;
violation of the requirements of regulators (in order not to fall under the pressure of state bodies, it is much easier for the platform to “de-list” the token than to fight off lawsuits);
problems with project security or suspicions of fraud.
Delisting remains the exchange’s defense mechanism against problematic or low-yielding projects. Naturally, “withdrawal from the run” leads to the fact that the price of the coin falls rapidly and may even tend to zero. True, exchanges warn in advance about the removal of cryptocurrencies from the sites, giving users the opportunity to sell or withdraw assets in these tokens.
The release of a new cryptocurrency on a top exchange is a great chance to make money on this asset. Of course, no one can guarantee that the value of a young coin will definitely increase. But most of the time, that’s exactly what happens.
To increase the chances of investment success, you need to be aware of news about young startups and plans for their development, monitor specialized forums and official pages of exchanges, and be able to independently assess the prospects of projects. The combination of all these actions will help you get the most out of your personal investment.
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