Before cryptocurrencies and tokens become available for trading, they must go through a lengthy review process. Only after several stages of selection will they be able to get on the exchanges, which are the main tool for trading digital assets. On a cryptocurrency exchange, as well as on a stock exchange, this process is called listing. With the addition of cryptocurrencies to trading platforms, their development trends change significantly.
How is the listing on the stock exchange
The initiators of the listing, as a rule, are the creators of the coin. It happens that trading platforms can take the initiative and add an asset if the coin is already in demand among traders.
How to add cryptocurrency to the exchange? Methods may differ, depending on the chosen site and its popularity. Each trading platform sets its own rules and requirements for adding an asset. Some exchanges set quite high standards, while others are more loyal to new cryptocurrencies.
To be added to the exchange, the issuer needs to go through several stages:
Fill out the form, where you need to specify basic information about the project: creation date, Github page, White paper, mining possibility, emission, etc.
Based on the data received, the trading platform will analyze the profitability and liquidity of the asset.
Based on the results of the analysis, a special commission will decide whether to add the cryptocurrency to the list.
If the decision is positive, the issuer and the trading floor enter into an agreement.
The main thing that cryptocurrency exchanges pay attention to is the usefulness, functionality and value of the coin. The next most important criterion is security, since if the cryptocurrency network is hacked, the exchange will also suffer. They also pay attention to the reputation and professionalism of the developers.
Sometimes sites hold contests and surveys among traders. Bidders are invited to vote for prelisted coins. The winning cryptocurrency will be added to the list.
Why does the cryptocurrency price increase after being added to the exchange
The main criterion for the value of any currency is its prevalence. If fiat money has at least an imaginary backing of gold and a link to the economy, then popularity is the only decisive factor for cryptocurrencies. The more people who use an asset, the greater its value will be.
The information that some new cryptocurrency will be added to the top platform already significantly stirs up interest in it. During such a PR campaign, a huge number of traders learn about cryptocurrency, and the very addition of a token is a signal to buy.
An increase in demand for an asset inevitably leads to an increase in its value. On average, after adding the value of the cryptocurrency increases by 25-30%. This is the so-called “stock market effect”, which is achieved through popularization. It should be noted that the effect is often short-term, and after the hype, the value of the coin begins to gradually decline.
Sometimes the opposite situation is also observed, when immediately after getting into the listing, the value of the coins begins to decline sharply. As a rule, this applies to coins launched as part of an ICO. Investors who invested during the token sale seek to take profits and actively sell the asset on exchanges.
Advantages and disadvantages of listing
It is no accident that developers put in so much effort to get listed on exchanges. Adding a token to a listing has a number of benefits for the developer:
increasing investment attractiveness;
facilitating the further development of the project;
increasing confidence in the asset and developers;
increase in capitalization;
expansion of the sphere of influence.
For investors, adding to the listing is a guarantee and an opportunity to earn. The reliability of such coins has been verified by experts. An increase in liquidity is also a significant advantage for investors. Those who invested in the asset during the token sale can now be sure that they will be able to sell the coins and take profits.
The disadvantages of adding to the listing include a complex procedure and the need to pay a commission for analysis. In addition, after entering the exchanges, cryptocurrencies attract special attention, and from that moment on, any change in the project’s policy will be instantly reflected in the value of the coins.
How can an investor make money on this?
Experienced investors have learned how to make money on any cryptocurrency market events, and listing is no exception. The scheme of earnings is quite simple:
the news summary is monitored for the presence of suitable newsbreaks;
having found information about the upcoming addition, the investor buys the asset before it enters the exchange;
after being added to the exchange list, the coins “merge”.
The most important thing is to choose the right exit point from the market. As a rule, a coin has an increased interest and, accordingly, the value is held for several days or a week, and then gradually decreases. Novice investors are advised to sell coins without delay. With experience tracking price corrections, you can wait for the highest price.
Despite its simplicity, the method is also associated with several risks:
The news may be fake. In such circumstances, the investor will go into the red. To prevent this, it is recommended to use only trusted news sources, such as official pages of exchanges and developers. Every news item needs to be verified.
Wrong choice of digital asset. As mentioned earlier, adding to the listing does not always have a positive effect on the value of the coin. Growth may also not be as sharp as expected. It is recommended to pay attention to not the top, but promising coins.
Wrong exchange choice. The profitability of such investments directly depends on their popularity. Adding to small services may not cause a significant resonance, but getting into the exchange list of large services is almost always a rush.
Adding to the listing is a decisive moment in determining the future value of the cryptocurrency. If the developers managed to achieve the placement of an asset on major exchanges, then we can count on an increase in value and popularity. From this moment on, the cryptocurrency goes into free float and its further value will be determined by supply and demand, and will also reflect all the actions of the developers. For investors, the listing of tokens is an additional guarantee and an opportunity to earn.
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