What are the reasons for the growth of the price of tokens after they are listed on the exchanges?
Only an experienced player of the market or an advanced analyst can predict the growth of the real value of a coin. For a simple investor, and, especially, the so-called "hamster" (a beginner), changing of quotations usually turns out to be a surprise. And usually - unexpected. But not everything is so bad, because an inexperienced trader can foresee the nearest jump of the price in a fairly simple and reliable way. To do this, you need a little patience and wait until the moment when the cryptocurrency will be added to other exchanges. Where is the connection between the expected rise in the price of cryptocurrency after its listing on the exchange? Let's see how you could earn on that.
Why, as a result of adding of the coin to the exchange, the market value of coins increases?
The so-called "exchange effect" has been known for a long time by experienced players of the cryptocurrency market. It is the spread on the new exchanges increase the popularity of the coin and, as a result, its liquidity.
The so-called fiat money are always tied to a physical, real asset that can be seen, touched, and moved from place to place. Usually paper money are backed by the gold reserve of the state. Cryptocurrency is working completely different. Its value is backed exclusively by the trust of market participants. More coin was sold, the more trust it gained. As a result, the number and activity of people who want to buy or sell cryptocurrency, increases, its market value necessarily increases.
Note that improving the technology of blockchain doesn't affects the growth of the price of coins. After all, if few people know about the cryptocurrency, it means that it's not really needed, and therefore it's cheap. The most vivid example of this is the fact that Bitcoin, well known by everybody, which for many years demonstrated an increase of the price, proportional to the prevalence.
How is the demand for a new coin created? Only by actively promoting it in the market. And, in fact, where does this happen? Where traders buy/sell cryptocurrency - on specialized exchanges.
What happens when a new coin is listed on the exchange? It gradually turns into a market instrument.
The more exchanges will be used for promotion, the more traders will find out about its appearance on the market.
- The groups of supporters of the new cryptocurrency.
- Attraction of new investors.
- Expanding the sphere of influence.
Here, the general regularity for cryptocurrency is beginning to work - the more exchanges are attracted for promotion, the more value of the coin will grow. As an example, leader of the rating, Bitcoin, which is traded by more than 100 exchanges, and the eightieth in the rating, WAX, presented at only nine exchanges.
Note that not only the number of trading platforms determines the success of coins in the market. The reputation of the exchange in the cryptocurrency ecosystem is also important. Therefore, to increase liquidity, a new coin should be presented in the listings of the leading trading floors. It will either keep neutral dynamics, or, as a result of the inevitable lowering of quotations, eventually disappear altogether.How does the growth of coin value happens after adding to the trading floor?
In order to get the potential investors interested, it is enough for the news that a new cryptocurrency will be added to the exchange. Note that experienced investors are extremely interested in finding a new coin on the exchanges on time. The normal result of the preliminary PR company is informing the community about the upcoming event. The appearance of the token in the listing is already a signal for the community that it's time to buy assets.
Consider the classical scenario:
- At the first stage, the exchange and issuers of the coin inform the community about the upcoming listing. To do this, the exchange has its own website, and developers use all available communication channels.
- If the means of the advertising campaign are chosen correctly, then the goal will be achieved. That is, the interest in the new cryptocurrency is heated in the community.
- In anticipation of the natural growth of prices on the new site, traders and investors of exchanges, where it already trades, start to buy the cryptocurrency. This attracts investors who haven't previously dealt with this coin. As a result, at the exchanges where it was listed before the cost of the cryptocurrency increases.
- When the coin appears in the listing of a new trading floor, its price, heated by the already high demand, is rapidly increasing.
Analysts of crypto market found an interesting psychological effect. Investors have no shadow of doubt that the rate will rise. Therefore, in anticipation of the appearance of a new coin on a new exchange, investors getting more active on the exchanges where it was listed before. Still nothing happened, and the cryptocurrency becomes more expensive every day wherever it is traded.
Here cryptocurrency developers need to choose the right PR campaign strategy. The first news about the upcoming listing occurs 2-3 weeks before the actual event. Then the advertising company goes on increasing, warming up interest to the new coin on the exchange. Those who are on time will find themselves in the most favorable situation - they will be able to buy a relatively inexpensive coin on their exchange. It isn't recommended to overstrain investors' expectations that at the time the token appears in the new listing, many potential investors are already lost.
It is the first few days after the first release that are important for advanced investors. During this period, the community is still not heated enough, and awareness of the news hasn't yet reached a level sufficient for a significant jump in the price of the coin.
If the issuers of the token and the exchange managed to meet the optimal conditions for its presentation on the new exchange, then after adding to the listing there is always a rapid increase in the value of the cryptocurrency at all trading floors. Accordingly, the capitalization of the coin on the crypto market increases.
All examples of the correct promotion of the cryptocurrency are demonstrated by the leader, Bitcoin, whose rate after posting on Poloniex and HitBTC grew by almost 400 percent in just a day. The Zilliqa coin raised its price from 0.03 to 0.16 dollars as a result of its listing on the really popular exchanges Bithumb and Upbit. Examples of the growth in the value of tokens after listing on new exchanges are numerous and they all just confirm the rule.
Note that the "effect of exchanges" works not only with little-known coins. A fairly well-known cryptocurrency ZCash in the spring was estimated at $80. After it appeared in the listings of the top exchanges by the summer, the coin already costs $400. Litecoin rose 15 percent after listing on Bithumb, and the listing on Coinone brought the coin to the fourth position in the world rating.
Enumerate successful examples can be as long as unsuccessful attempts to promote the cryptocurrency by listing it on new exchanges.
Is the market value of the cryptocurrency listed on the exchange necessarily grow?
This rule is confirmed by numerous reliable facts. But all the rules has exceptions. We can present to your attention the most characteristic examples of how the listing of a coin of a popular exchange didn't have the best effect on its value:
- Fake information. Some developers try to use it to promote their project in order to warm up potential investors. But such a strategy doesn't always work for the benefit of the cryptocurrency. Let's recall ZCash. This coin grew very well when it was announced about its listing to Bithumb. But when it didn't happen, interest and confidence in the coin were shaken. This cryptocurrency, however, appeared in the listings of the top site and the coin managed to restore the lost positions. But, as the saying goes, a little lie generates a lot of mistrust, and so the developers of token experience the reputation losses so far. Why? Because the cryptocurrency is still subject to inadequate leaps and bounds. There are more simple examples of the negative impact of unconfirmed news. In the last year of 2017, Ripple was declared in the Ripple listing. Until this happened, its cost increased by 15 percent. But when the official denial was published, the value of the coin fell.
- Appearing on the exchange immediately after the ICO. Here it is necessary to understand that tokens bought during the ICO are of interest to investors as a tool for quick earnings. It seems all right - their cost is growing rapidly, but at whose expense? At the expense of those who aren't directly related to the presale. Therefore, holders of newborn tokens very soon try to get rid of them, which leads to a significant reduction in the market value of the coin. Need an example? There you go! There is such a coin Kyber Network, which initially traded at $2.5. And where is it today? As a result of the massive cryptocurrency drain, now it costs less than one dollar.
Which of the above is the conclusion to investors? It is necessary to understand that the sharp rise of a new coin for the exchange is the result of practically unjustified and unrealized expectations of investors. Correction occurs always and the higher the coin rate has taken off at first, the stronger will be its fall. However, both the growth and the decline in market value - normal instruments of earnings.
- How to make money on natural or speculative growth?
In this scheme, there is nothing extraordinary. All you need is:
- Constantly monitor the news, look for interesting information occasions;
- To buy a potentially interesting coin before it appears in the listing of the new exchange;
- To sell the coins purchased on the "old" sites on a new exchange.
It Seems simple. But, nevertheless, the investor needs to be prepared for a variety of underwater stones, capable of turning to ashes the most optimistic expectations:
- The news about adding a coin to the listing of the exchange may be faked. As a result, the investor may find himself with a full wallet of cheap or absolutely useless coins and a minus in his pocket. Watch the news sources. Trust in official websites, developer communities and / or exchanges. Have found a worth information - find its confirmation, but rather a few of the authoritative sources.
- Choosing the cryptocurrency. Here you can make a mistake, especially if its volatility is not high. If it is new on the exchange and not really popular coin with high volatility, it is not recommended to buy. More attention is paid to the little-known new cryptocurrencies on the exchanges. Here the investor will work.
- Choice of a trading platform. On unpopular exchanges, investors shouldn't expect sharp price spikes. With a small start up capital it's better to focus on Asian and local markets. If you are focused on significant earnings, then for you open top platforms, where the leader remains Binance.
And the last question - when after choosing a reliable information source, the correct cryptocurreny and exchange, have time to sell coins at the best price? Here the rule is that the maximum price for a coin is kept, as a rule, no more than a week after the cryptocurrency appeared in the listing of the exchange. Plus or minus a couple of days - and there will be an inevitable fall of the price. Therefore, if you are greedy - you lose. Sell until the day of correction comes!