With the price of Bitcoin hitting yearly lows, and many Altcoins now dipping far below their ICO price, it’s becoming clear that many cryptocurrencies will not survive this bear market.
Because the ecosystem is so new, most of us are uncertain about what signs to look for to determine whether a crypto project is on its last legs. Price is an obvious indicator, but that can sometimes be deceiving. After all, if all the projects that lost 70-90% of their value in the past year were on their way out, then that would only leave about 3-5 projects in the entire space.
A much clearer sign of a project’s demise is its delisting from major exchanges. Just today, OKEX announced that they would be delisting a third batch of trading pairs.
The exchange stated that;
“To create a robust trading environment and offer the best trading experience to our users, we will delist several TRADING PAIRS with weak liquidity and trading volume according to the OKEx Token Delisting / Hiding Guideline.”
The affected tokens include Request Network (REQ), Raiden Network (RDN), Metal, (MTL), Iconomi (ICN) and around 30 more. Most of the tokens are paired with either ETH or BTC, while some are paired with USDT.
The rising number of tokens being delisted should not surprise anyone. However, some of the names included in the list are still quite shocking, especially considering how highly tokens like REQ or RDN were held in regard just 6-8 months ago.
What this reveals is that many promising projects are failing to not only meet the standards of investors but even the standards of the exchanges. Exchanges are businesses that literally profit from featuring as many tokens as possible (more token trading pairs equals more revenue earned from trading fees). Yet, the listed 30 or so tokens have performed so poorly, in matters of trading volume, that their presence on an exchange like OKEX is a net negative.
According to OKEXs delisting guidelines, decisions to delist a token are based on the following criteria:
- Project and Team – making major changes in the team, product or business model without notifying OKEx in advance for auditing; or transferring or selling the project
- Token Trading – Increasing the total available supply of the token or splitting the token without notifying users and the exchange 15 days in advance
- Operations – Major deviations in information disclosure, deceiving users and the exchange
- Project Technology – The project development is not carried out in accordance with the timeline of the roadmap planned in the White Paper. Progress delays without explanation or announcement
- Security & Safety – Serious technical or safety issues found during Mainnet swap and refusing to pay a security deposit
These criteria lead us to believe that the current batch of tokens being delisted had not only failed to meet expectations in terms of development, but may have also made big decisions without informing their community or the exchange, which would be a big breach of trust in the crypto space. Furthermore, regulatory issues may have created added pressure for exchanges to delist certain tokens that were clearly offering unregistered securities. Exchanges who have an interest in penetrating the US market would have to be especially cautious about the type of tokens they allow to be traded to avoid clashing with the SEC.
OKEX is Not Alone
In recent months, other exchanges, like Bittrex and Kucoin have also delisted tokens. In October, Bittrex delisted Bitshares, Bitcoin Gold and Bitcoin private. Kucoin announced that they were delisting 6 coins just 2 days ago (Raiden Network being amongst them). Lastly, Poloniex announced back in July that they would delist 9 coins.
The reasons for delisting ranged from security issues (Bitcoin Gold experienced one of the largest 51% attacks in cryptocurrency history), difficulties runnings nodes (BTS), or simply limited trading volume. Predictably, all coins experienced a 20-80% decline when their delisting was announced.
The Positive Aspect: Is this cleansing a precursor to the bull market?
The bright side of OKEX removing these trading pairs from their exchange is that it increases the quality of tokens available for trading. OKEX is one of the largest exchanges in the world, and by setting strict quality standards, it displays a level of integrity on behalf of the exchange, and it also reduces the risk of retail investors being exposed to fraudulent projects. This is a great example of the crypto space maturing and taking responsibility for filtering out its weakest links and bad actors so that the SEC doesn’t have to.
Ultimately, if more exchanges focus less on short-term revenue, and more on raising the quality standards of the tokens listed, we will establish a natural filtering process that allows only the strongest and most transparent projects to flourish during the next crypto bull run.