Is the Binance Effect Dead? Why New Listings No Longer Guarantee Profits

Some things in the crypto world go unquestioned. Binance effect was one of such things, which is the belief that Binance listing guarantees a surge in token value. This was always seen as a game-changing milestone for crypto companies and cemented their positions in the market. And the logic is clear here: more exposure, more investors, more liquidity, and a higher market cap.. But in 2024 something changed and tokens started performing terribly after being listed on Binance, for instance:

• PORTAL (-69%)

• AEVO (-68%)

• SAGA (-63%)

Researchers analyzed the situation and concluded that tokens were listed to provide “exit liquidity” for Venture Capitalists instead of granting investment potential for traders. This suggests that listing doesn’t guarantee long-term growth and may signal a price peak rather than the beginning of an uptrend.

Research from Presto highlights how the market has shifted. It mentions double-digit gains of AI token in January, when projects like GRIFFAIN, AI16Z, ZEREBRO futures, saw massive inflows in December. In January, a new token $DTSI, created by Coinbase’s engineering lead, easily reached a $20M market cap within three hours. But then, the momentum collapsed. 

• ZEREBRO, SWARMS, AI16Z down over 90% in a month

• COOKIE, PIPPIN, BIO, AVAAI, SOLV, GRIFFAIN down over 80% in a month

• VVV, SONIC, VINE, ARC, ANIME, AIXBIT – down 70%+ 

This sparked debate in the crypto community. Binance’s founder, Changpeng Zhao (CZ) called the token listing process a bit broken.

The Binance listing was announced just 4 hours before the token launch. At this time traders rush to DeFi exchanges to buy the token before it appears on Binance. Once the token officially lists, these traders sell, so Binance users buy tokens at inflated prices. This distorts price movements in the opinion of CZ.  

So, is the Binance Effect dead? It certainly seems like it’s losing its magic for traders. 

#Binance #listing