How exactly do exchange listing announcements impact asset prices?
How exactly do exchange listing announcements impact asset prices?
Research shows that certain exchange listing news reliably move crypto prices. Yet, not all listing announcements are created equal. Here are some questions that traders would do well to have answered before buying the listing news:
As different cryptocurrencies grow in popularity, more and more exchanges often list them, adding liquidity and helping new investors and traders gain access to the crypto asset.
Historical data from crypto firm The TIE shows crypto exchange listings often have an impact on related cryptocurrency prices. When an exchange announces plans to list a new asset, there is generally a time gap between the announcement, and when the platform actually begins functional trading for that asset.
This can provide an opportunity for trading. And although sometimes exchanges simply list new assets and then announce the fact, these instances can also serve as trading opportunities, depending on the circumstances.
Overview of cryptocurrency listings
Ethereum-based crypto assets generally list on exchanges such as Uniswap early in their lifetimes, due to the lower barrier to entry for listing on decentralized exchanges, or DEXs.
Other platforms sometimes follow. Binance and KuCoin offer trading on hundreds of crypto assets, so listings on those exchanges are not too uncommon. U.S. exchanges, such as Coinbase and Gemini, typically lag other platforms in terms of listing assets.
Overall, Coinbase listings have had the biggest price impact on related assets in terms of percentage gains, based on data from The TIE. Binance listings have yielded the second-highest price impacts.
Varied results on different exchanges
A study from eToro and The TIE using data from 2020 found that cryptocurrencies listed on Coinbase with an announcement prior to actual listing rose about 50% on average following the news of the listing.
A six-day time gap sometimes existed between Coinbase’s listing announcements, and when the related assets went live for trading on the platform. Each asset generally rose 43% on average between the announcement and the actual listing, and rose another 7.5% on the listing date before falling in price on the day following the actual listing. Binance listings also have been known to cause significant price rallies.
Other exchange listings often cause price spikes as well, although the impact is generally smaller than seen with Coinbase and Binance. CoinMarketCap maintains a ranking showing more than 200 crypto exchange platforms in order of 24-hour trading volume. Coinbase, OKEx, Binance and Bithumb often make the biggest splash in terms of listing-related asset price increases, as shown in the chart below from The TIE.
For exchange listings in general, bigger exchanges with larger customer bases impact asset prices more significantly than smaller platforms. The number of assets on a given platform also plays into the equation, however. Since Binance, for example, has a large number of customers, but also already offers hundreds of assets for trading, listings can cause price rallies, but such gains may not hold as long as, say, Coinbase, before prices fall, according to data The TIE shared with Cointelegraph.
Source: The TIE
The Cointelegraph Markets Pro edge
Trading based on exchange listings often requires swift action. On many occasions, time is of the essence, with each passing minute potentially affecting bottom-line profits. Cointelegraph Markets Pro can get you information faster, possibly giving you an edge in the crypto markets.
Sometimes exchanges announce asset listings before actually putting the assets on their platforms, and sometimes they simply list them, informing the public of the development after the fact. Either way, access to such information can be key.
Exchanges notify the public of new listings in a number of ways, depending on the exchange. Blog posts and Tweets are common, but searching through sources all day hoping to find out about an asset listing before prices rise is nigh-impossible for humans!
Cointelegraph Markets Pro has a feature called NewsQuakes, part of which notifies you of exchange listings almost immediately after they hit the web, possibly before the rest of the market hears about them. The platform’s backend system constantly scans numerous web sources for data, looking for any sign of exchange listings as well as other big news. As soon as this information goes public on a web source, the system finds it and shoots out a NewsQuake, alerting you.
During Cointelegraph Markets Pro beta testing, platform customers sometimes received asset listing alerts up to two hours before the related exchange posted its news to Telegram or Twitter.
Important Note: Due to their nature as fiat-pegged assets, stablecoins are an exception and do not rise in price due to exchange listings. Wrapped assets, such as Wrapped Bitcoin (WBTC), also usually do not rise in price on listing news.
Cointelegraph Markets Pro setup
In general, exchange listings come through on Cointelegraph Markets Pro via the “NewsQuakes” tab.
source: Cointelegraph Markets Pro
You can check previous listing news by the "listings" tab.
source: Cointelegraph Markets Pro
Prices can be volatile around exchange listings, however, so exercise caution and judgement. Additionally, if a given asset’s price has moved significantly already, it might be worth waiting for the next opportunity.
To receive notifications on the go, hook up your Cointelegraph Markets Pro account to Discord.
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