May 31, 2019
If you have been following the podcast at all recently, you probably heard us talking about the new market phenomena we've noticed of exchange token launches outperforming the rest of altcoins. In a speculative market like cryptocurrencies, trends come and go and as an investor in this space it's important to be able to spot them ahead of time to take advantage and position yourself before the majority of the market pours in. The earlier you get in, the greater your opportunity to make big returns. Once the majority of the market catches on to a trend most likely it's on its way out.
In this case, Binance has been responsible for some major successful IEO launches recently. If you're not aware, IEO's stand for Initial Exchange Offerings. In 2017, newly founded cryptocurrency projects would create their own tokens through the use of Ethereum's platform and host a pre-sale of their newly minted tokens in exchange for funds. This wave of crowdfunding grew wildly popular resulting in an explosion of projects and overall market euphoria founded mainly on nothing. Most of these projects ended up being completely useless or were intentionally designed to scam "investors" out of their money. This process of raising funds for their projects was called Initial Coin Offerings, or ICO's, similar to how companies go public with IPO's in the traditional equities market. Regardless of their outcomes, if you participated during this ICO mania your chances of making good returns were pretty good since no fundamental research was being done by the majority of retail investors. The speculative value alone and overall market hysteria was enough to catapult any projects value once listed on exchange. However, towards the end of 2017 the hype surrounding ICO's began to fizzle and no longer were investors buying what the projects were selling, resulting in a market crash.
Today, exchanges are picking up the torch and are repeating essentially the same process of crowd funding but claim that launching through their platforms legitimizes these projects by providing the necessary due diligence retail investors were unwilling to perform to weed out shit tier projects. Whether or not that is true has yet to be seen since we are just barely in the beginning stages of IEO's hitting the market. But one thing is for certain based on my experience. If Binance has its hand in something, pay attention!!!
If you know anything about the history of Binance, it's no surprise the projects they have selected as worthy to enter the market through their launchpad instantly gain major market traction. Going back to when Binance first launched in 2017, it's exchange they came online with had IEO's already offered to their users, only they weren't called IEO's at the time. At the time of launch there were a few projects Binance endorsed and allowed the purchase of ICO tokens through their platform. The most notable of them being Tron. However, due to regulatory pressure from governmental securities agencies, Binance was forced to withdraw such offerings. But that didn't stop Binance from influencing the success of Tron's market presence through the use of trading competitions to increase trading volume of the Tron token on Binance exchange. Think about it, imagine a world where the Nasdaq was able to select a tech stock of the month to promote and artificially create an incentive to trade thus increasing its volume and price. The SEC would rain down a shitstorm like never before seen on any exchange practicing these types of price manipulation tactics. Fortunately for Binance, crypto is still in it's wild west phase, allowing them to use their market influence to pick and choose winners and losers.
Prior to these trading competitions Tron had virtually no market presence trading at nearly zero daily volume. Post trading competition volume skyrocketed to number one over the entire market naturally increasing it's exposure and price astronomically. I have to disclaim that Tron wasn't the only token selected for these types of contests. But the results were always the same, huge spikes in volume to whichever token chosen by Binance for these contests.
Fast forward to 2019, now Binance has it's own platform for launching tokens and subsequently sending them to the moon. Below is a chart tweeted out by the CEO of Binance himself (CZ), boasting about the performance of his chosen few. As of writing this article in about 5 hours Harmony One is scheduled to takeoff meaning trading will begin. I won't make any predictions as to how quickly its ascent to lunar glory will occur, but I can confidently say that I will be focusing my attention as should anyone reading this. It's clear as day Binance wants these tokens to succeed at all cost regardless of their technological importance. In Harmony's case, it's the introduction of another layer one scalable general purpose blockchain intended to compete with Ethereum. Hilariously, a project like this if launched through a traditional ICO would not garner much attention due to the hundreds of already competing platforms trying to take Ethereums spot, but because of who Harmony One is affiliated with, we can expect to see some fireworks ahead. Also, keep in mind Binance has already set the stage for Harmony to succeed by introducing a trading competition similar to the one that catapulted Tron to its current position.
At the end of the day, now that we know what Binance launchpad is up to. Be smart and keep an eye on any future token launch. How long this trend will last is unknown, but its good experience nonetheless to understanding how the market psychology of this cryptocurrency la la land behaves overall.
