The Crypto Exchange Listing Conundrum: Why Newly Listed Tokens Keep Crashing

Author: Marie Poteriaieva, CoinTelegraph; Compiler: Wuzhu, Golden Finance

New token listings are like the stock market on steroids.Without the guardrails of traditional finance, prices can fluctuate wildly, making huge profits in days or even hours, and more often than not, going bankrupt. The Binance exchange is often the preferred listing destination for many of these tokens, offering traders high-risk bets and the opportunity to chase the next market hotspot.

A closer look at its listings, however, shows that these opportunities are statistically not optimistic. Some analysts believe that the probability is close to zero because most new Binance listings follow a predictable pump and dump cycle with no discernible recovery afterwards.

This brings up a key question: Is this just the nature of today’s markets, or are centralized exchanges actively driving unsustainable speculation?

Recent Binance Token Listings

Many new token listings on centralized exchanges follow a similar pattern. Prices surge within hours of listing, then quickly plummet and stabilize at lower levels.

Here’s a breakdown of all new token listings on Binance since the beginning of the year:

• LAYER (DeFi) — listed on Feb 11, down 50% from listing high.

• TST (Memecoin) — listed on Feb 9, down 80%.

• BERA (L1 Blockchain) – Listed on February 5, down 38%.

• ANIME (Culture Coin) – Listed on January 22, down 74%.

• TRUMP (Memecoin) – Listed on January 19, down 82%.

• SOLV (DeFi) – Listed on January 17, down 78%.

• COOKIE (MarketingFi) – Listed on January 10, down 74%.

• AIXBT (AI) – Listed on January 10, down 67%.

• CGPT (AI) – Listed on January 10, down 68%.

• BIO (Biotech) — listed on January 3, down 88%.

BIO, SOLV, TRUMP 1-day price chart. Source: Marie Poteriaieva, CoinGecko

So far, only Berachain (BERA) seems to have a chance to rebound due to strong fundamentals and an active community. The fate of KAITO (InfoFi Token, listed on February 19) also remains uncertain. But the pattern is repeating itself in everything from DeFi to AI to memecoins to biotech.

Are these listed tokens particularly bad?

Some analysts believe that all new tokens are doomed to be pumped and dumped. However, recent listings on other exchanges suggest otherwise. For example, IP (decentralized IP management), which was listed on Gate.io on February 13, has surged nearly 5x since then. Another example is HYPE, which was listed on KuCoin on December 7 and has performed well.

In some cases, the familiar pump and dump pattern also occurs when Binance lists tokens that are already trading on other exchanges. For example, CGPT has been trading since April 2023, but its price briefly doubled after it was listed on Binance in January — and then fell below its pre-listing level.

Another example is CAT, which rose 54% on its Binance listing day on December 17 before plummeting 86%. VELO tokens, which have been trading since 2022, rose 147% after listing on Binance on December 13, then fell 83%.

Interestingly, VELO’s listing on Kraken on February 18 did not have a significant impact on the price.

VELO, CGPT, CAT 1-day price chart. Source: Marie Poteriaieva, CoinGecko

Why does CEX token listings see pump and dump?

Several factors (alone or in combination) can explain why newly listed tokens sell off when they begin trading on centralized exchanges.

The most obvious reason is that they provide an ideal exit opportunity for insiders and venture capitalists. With no restrictions, project backers can immediately dump their holdings, cashing out before real market demand has built up. This can be a signal that the project lacks long-term interest or any real utility.

Another contributing factor is limited initial supply and low liquidity. When a token debuts with a restricted circulating supply, early buyers can quickly drive up the price. In this case, as more tokens become available (whether through team unlocks, vesting programs, or liquidity injections), the artificial scarcity wears off and the price corrects.

Finally, overengineered hype and speculation could play a significant role. Exchanges like Binance have large user bases and brand recognition that can create the so-called “casino effect,” where traders flock to an exchange in the expectation of quick, explosive gains rather than sustainable value.

It’s also possible, at least in theory, that exchanges could artificially inflate demand, prompting traders to flock to buy at any price. There’s no hard evidence of such manipulation, but Binance has previously faced accusations of wash trading and market-making strategies designed to inflate demand and volume.

However, Binance itself stressed that it has a “robust market oversight framework that identifies and takes action against market abuse.”

While the above analysis of recent listings is far from exhaustive, it suggests that some exchanges’ listing mechanisms are geared more toward short-term speculation than sustainable project growth. By prioritizing volume, exchanges benefit from the hype cycle, but this approach can erode user trust and draw regulatory scrutiny.

Centralized cryptocurrency exchanges aren’t the only ones driving hype around new token launches. Even Argentinian President Javier Milei was recently caught doing the same. Additionally, some CEXs do attempt to mitigate some of the risk by labeling newly listed tokens as “seed” investments and requiring users to acknowledge their high-risk nature.