Valuing Cryptocurrencies: When to Go by Exchange Listing Count and When Not To
At the moment, there are more than 1500 cryptocurrencies existing today
, with a combined market capitalization of over $18 billion. As the crypto industry progresses at a high pace, investors are constantly willing to trade in this never-sleeping market. In order to be able to participate in cryptocurrency trading, users turn to the so-called exchanges.
Cryptocurrency exchanges, or digital currency exchanges, are platforms that enable customers to trade digital currencies for other assets. Cryptocurrencies can be traded for fiat money or different digital currencies. Today, there is a myriad of cryptocurrency trading platforms that exist to meet the growing needs of the crypto community.
Without a doubt, cryptocurrency exchanges have a great influence on the development of projects and their liquidity. Yet, to what extent does the number of featured exchanges matter when it comes to the bright future of the project?
Let’s discuss this.
ICO Market: Trust Issues Are Sunk Its Popularity?
The cryptocurrency market has been overtaken by the popularity of ICOs in 2017, with the peak craze happening at the end of December 2017, when Bitcoin hit the ceiling at around $20K. In addition, thousands of ICOs have taken place last year, with only a fraction of them surviving and bringing value today.
Unfortunately, the ICO market was ill-populated with hundreds of scam projects, which raised a significant amount of money and never delivered on their promises, and then suddenly disappeared. This trend has affected the trust of the community for ICOs, decreasing their popularity and success rates.
IEOs as a Safer Alternative
The year 2019 saw the birth of a new fundraising method, which combined the ICO model with a more solid and stable way of implementing the project. Initial exchange offerings (IEOs) had a blast this year – during the first half of 2019, IEO projects were able to raise $1.6 billion. The second half of the year has continued riding the trend, with the top exchange launchpads fueling the development of the IEO market. Investor demand for the IEOs also stays strong, as a number of promising cryptocurrency projects are taking place, heated up by crypto channels in Telegram.
However, what determines the success of IEOs in modern crypto space? Some claim it depends on IEO project’s liquidity, others mention the token price and adherence to the roadmap of the project.
Some talk about the community size as the gauge of the progress of a project. Today, we will talk about one particular factor – the number of exchanges listing the project.
Does it affect a project’s long-term success or popularity? Does it determine the true value of the project?
The More The Merrier? Not Quite
The number of exchanges listing the project is closely tied to its liquidity. Without a doubt, liquidity is something that plays a big role for a project. Yet, in the case with IEOs, thanks to their mechanism of crowdfunding, they get instant liquidity as they are getting listed on an exchange. Thanks to this feature, IEOs overcome one of the major setbacks that were faced by ICOs – lack of liquidity.
The key important fact when it comes to the IEO liquidity – quality matters over quantity, especially when it comes to multiple exchange listings.
There is a multitude of cryptocurrency exchanges that are now realizing that the implementation of the launchpad is beneficial for them. Along these are Binance, Bittrex, Bitmax, Huobi, Kucoin, and OKEx along with many others.
, as a matter of fact, is one of the growing crypto exchanges that are now among the top 10 digital currency exchanges in the world. At the moment, it has more than 190 altcoins listed, with the number growing almost every day.
is yet another prospective exchange that offers a variety of popular coins, including BTC, BCH, XMR, DAG, ETH, XRP, EOS, LTC, ADA, TRX, NEO and the like.
is an exchange that is based out of the US and offers users the opportunity to trade more than 190 cryptocurrencies as of today. This exchange follows the latest US crypto regulatory practices.
is a Singapore-based exchange that was introduced by a group of professionals with a great digital asset background. At the moment, this exchange offers token trading, perpetual swap trading, OTC trading, and other financial products.
Now, many of these and other exchanges are listing coins on a daily basis – but aside from affecting coins’ liquidity factor, do these exchanges add a lot of value and stability to the projects? Not exactly.
Just as we mentioned above, quality matters much more than quantity. Speaking differently, the success of a crypto project largely depends on the features of the exchange it is listed on. Some important factors that crypto projects should take into consideration when assessing the possibility of listing are:
Do token’s values reflect those of the exchange? How about the mission – does it align? If a project’s values and vision are in conflict with those of the digital currency platform, a listing might not bring any value to the project, if not depreciate it.
The importance of this factor cannot be overstated. With recent cyberattacks wiping out thousands of users’ wallets clean, tokens should double-check the exchange for the safety practices in place. Noteworthy, big and popular exchange does not always have the best security systems in place – remember Coincheck hack
Most of the major cryptocurrency exchanges are following the latest regulations when it comes to compliance. Yet, there were cases of popular exchanges overlooking simple regulatory rules. A prospective and stable crypto project would not want to be a part of such an exchange.
These are just some factors that should be on a discussion board of crypto projects that are planning to get listed on yet another exchange. The common belief in the crypto space is that the number of exchanges that the coin is listed on equals the project’s true value. Let’s see real-life examples.
Successful Blockchain Projects 2019
One of the great performing IEOs, according to the CryptoRank’s list
, is GoWithMi. The native token of this project, GMAT, has been able to hit 3.56X ROI USD, with its ATH ROI USD being a whopping 21.08X.
GoWithMi is committed to building the world’s first complete decentralized location-based services (DLBS) infrastructure. The project has taken off on Gate.io, and was able to raise $1,350,000 during its IEO.
At the moment, this promising Singaporean project is listed on Gate.io, Big.One and HotBit, with all three exchanges being under $500,000 daily trading volume. In addition, these three exchanges are not mainstream and they are not popular globally when compared to other giants like Binance and Coinbase.
Nevertheless, despite being listed on only three exchanges, GoWithMi continues to deliver on its promises and grow its community.
Another successful cryptocurrency project that was introduced this year is Tokoin. Tokoin’s TOKO has performed very well – it reached ATH ROI USD at 9x, with ROI USD standing at 4.18X. Tokoin is striving to secure a better future for micro, small, and medium enterprises (MSMEs) globally. Thanks to its innovative platform, growing businesses are able to use their potential to the full without facing limitations.
Currently, Tokoin is listed on KuCoin and Atomars, according to Coingecko
. In spite of the fact that users are now only able to buy this coin on these two exchanges, token’s performance stands among the top 10 for 2019.
Yet another example of a successful coin that has not been listed on multiple popular and big exchanges, and still was able to bring 2.93X ROI USD and 3.97X ATH ROI USD is Pledgecamp (PLG).
Pledgecamp aims to disrupt the crowdfunding industry with blockchain-powered escrow contracts. With an impressive list of advisors on its side, this token has been listed on 6 exchanges so far. These are Bithumb Global, MXC, Bitforex, Piexgo, OKEx, Binance DEX.
Notably, even though this token is listed on Bitforex, which surpasses all other mentioned exchanges (and those of GMAT) in daily trading volume, Pledgecamp’s token’s price is trading cheaper than GoWithMi’s token.
We’ve discussed that the number of exchanges that list coins does not affect or determine its true value. Yet, what does then?
As mentioned in this article, some key factors like liquidity, community size, adherence to the roadmap are among those that will pave the way for a project.
Nonetheless, there is one more factor that has to do with the exchanges – it is the exchange platform that launched that IEO. Projects that took off of KuCoin, Huobi, OKEx, Gate.io, and Binance generally brought significant profits to inventors.
Following the same logic, investors tend to choose platforms they trust – they see it as a measure of a certain project’s future success.
To conclude, it is worth to mention that the popularity of the exchange does not always reflect its safety or level of trust that investors have. Choosing the IEO project to invest in takes a lot of thought, and sometimes hyped-up projects fail without even reaching their goals.
Subscribe to get your daily round-up of top tech stories!