Analysis of Binance New Coin Investment Returns: Exclusive Curse for Top1

The main reason for the poor performance of Binance’s newly listed tokens is that the “coin listing effect overdraws” the room for growth.

Written by: Loki

According to the Binance Listing announcement, during the 13-month period from 2022.4.29 to 2023.6.4, Binance launched a total of 20 new spot transactions of tokens, including OP, APT, ID, ARB, EDU, SUI6 new coins (in other The exchange has been online for less than 3 months) and 14 old coins (at least 1 other exchange has been online for more than 3 months).

Based on these data, we can calculate three rates of return:

• Yield from launch (closing price) to date
• Yield from listing (closing price) to listing 7 days (closing price)
• Yield from 7 days (closing price) to date

1. Binance listing rate comparison

The average rate of return of the 20 projects held so far is -22.3%, while the average rate of return of BTC in the same period is 7.9%, and the price performance is significantly worse than that of BTC; only ID, RPL, and LDO have a rate of return higher than that of BTC in the same period, and the remaining 17 of them all underperformed BTC in the same period. Among them, RPL has the highest rate of return higher than BTC (26% ahead), and OSMO is the most lower than BTC (96.6% behind)

Considering that there is a listing effect on Binance, the local price may be relatively high on the day of listing. We use T+7 as the benchmark date for calculation, and the average return rate of 20 projects obtained is -11.3%, which is the number of projects that outperform BTC Increased to 6, a significant improvement, but still behind BTC's average yield (9.4%).

This data shows that the [Coin Listing Effect] has lowered the holding-to-date yield of Binance SGD to a certain extent, but even if users start buying from T+7, they still face a high probability of loss.

Next, we try to be a short-term speculator, buying at the close of the Binance listing day and selling it 7 days later. It's a pity that we can still only achieve a yield of -11.8%, which is worse than BTC's -1.6%. Only 5 of the 20 buys can be profitable, 6 can outperform BTC, and most of the remaining attempts will lose to BTC and lose money.

First of all, we can be sure of one thing: the 14 old coins listed on Binance are all fundamentally sound and have been tested by the market, and also cover popular tracks such as L2 and Shanghai upgrades. Objectively speaking, they are indeed high-quality coins 】. If there is no problem with the project fundamentals or Binance’s screening criteria, there are three more likely reasons:

(1) The time to go online is late

This reason is more obvious in popular topics (such as MEME, ETHMerge concepts). Binance will list Floki and Pepe in May 2023. At this time, Floki and Pepe have been listed on almost all exchanges; the launch time of LQTY, OSMO, and RPL is also slightly later. Night. This hysteresis also reflects to a certain extent Binance’s lack of industry hotspots, especially bottom-up hotspots.

(2) Binance’s liquidity advantage becomes a dumping destination

According to statistics from Tokeninsight, Binance's spot trading volume in 2022 will account for 58.98% of the entire market, which is 6.44 times that of the second-ranked OKX. Binance has the largest number of users and the largest trading volume. Listing on Binance means more investors' attention, but this liquidity advantage will also become a dumping destination for projects, both in terms of volume and price.

(3) [Currency Listing Effect] Overdrafted room for growth

This problem has been analyzed before. In the first 7 days of listing on Binance, 20 tokens achieved an average return rate of -11.3%, which significantly lowered the user's return on investment. If 6 new coins are excluded, the average yield of the remaining 14 coins is -18.1%, which is even more obvious.

On this basis, let's take a look forward, because the [coin listing effect] not only affects the listing of the currency, but more gains have been realized before the listing of the currency. We selected 14 old coins and calculated the rate of return from the day of Binance listing to 7 days before listing on Binance (here we excluded 2 MEME and 6 new coins, because their realized gains are very exaggerated , will lead to data distortion, and MEME’s currency listing decision is more driven by market heat rather than fundamentals):

It can be seen that Binance’s [Coin Listing Effect] is very obvious. Except for LDO, the remaining 13 new coins on Binance have all experienced significant increases, with an average increase of 35.8%. (The BTC price dropped by 39K-29K during the LDO launch period), 35.8% Even if the -22.3% return rate since launch is deducted, the return rate of 13.5% can still be obtained.

3. Coin Listing Effect: Top1’s Exclusive Curse

After the above analysis, we can find that [coin listing effect] overdrawing the growth space is the main reason for the poor performance of Binance’s newly listed tokens, which also explains the difference in feelings between Binance and users:

From the perspective of Binance, according to a reasonable process, tokens with good fundamentals were selected to go online. If you buy the token before the listing decision occurs, or when Binance makes the decision to list the currency, even if the market cycle is prolonged, you can still earn a return higher than the market average.

From the user's point of view, I bought a newly listed token on Binance, and ended up losing X. The reason for this problem is the [coin listing effect]. The 35% increase has wiped out the upside space that the token should have. This is an irrational investment or over-investment. So the question is also very simple, the starting line has lost 35%, how can Binance SGD obtain excess returns?

In fact, the over-investment of the [coin listing effect], the late launch time (because more caution is needed), and the liquidity advantage as a dumping destination are all unique to Binance. In addition to these, such as IEO, layoffs (or personnel optimization) ), Labs’ investment is also widely controversial, but no one cares whether the top 10 exchange executives have girlfriends, and no one cares whether the 50th exchange lays off employees today. These are all exclusive curses for the industry’s Top1 .