How listing on digital asset exchanges affects token prices
Sponsored Editorial
The cryptocurrency market is highly dynamic, with digital tokens experiencing rapid price movements driven by various factors.
One of the most significant influences on a token’s value is its listing coin on a reputable crypto exchange.
What is Listing?
Crypto listing refers to the process of a digital token being added to a cryptocurrency exchange, enabling it to be traded by users of that platform. It can happen on centralised exchanges (CEX) or decentralised exchanges (DEX). Getting its token listed on a major crypto exchange is a crucial milestone for a project. It signifies broader accessibility and exposure to a larger pool of crypto investors, which can lead to higher trading volumes and improved liquidity.
How Does Listing Affect Token Price?
The listing of new digital tokens on a prominent exchange can have a dramatic effect on its price. Typically, the cost of a token tends to rise shortly after a listing announcement, driven by increased demand and heightened speculation. When a token is newly available to a large audience, the influx of buy orders can create upward price pressure, known as the "listing effect."
One well-known example of this phenomenon occurred with the listing of Polygon (MATIC). Before the listing announcement, MATIC was trading at around $0.35. Following the listing, which made it accessible to a broader audience of retail and institutional investors, MATIC’s price surged to around $2.
Another notable case is Axie Infinity’s (AXS) token. After listing on a large exchange in 2020, the AXS price experienced significant growth. At the time of the listing, the price of AXS was around $0.40. By the summer of 2021, AXS had surged to over $20.
However, it’s important to note that not all listings result in sustained price increases. In some cases, the price may spike temporarily but later correct as early investors withdraw profits after the initial surge. Price sustainability post-listing depends on the token's fundamentals and continued investor interest.
Impact of Delisting
While listing on a new exchange can boost token prices, the opposite is true for delisting. When a token is removed from an exchange, it often leads to negative sentiment and sharp price declines. Delisting may occur due to regulatory issues, insufficient liquidity, or project abandonment.
The negative impact of delisting can be substantial because the token becomes less accessible, causing reduced liquidity and investor interest. Delisting from multiple exchanges can erode confidence in the project, causing a long-term downtrend in its price.
While listings tend to have a positive effect, delisting from an exchange can severely damage a token’s market presence and value.
