Did the Coinbase Effect Just Get Beat Out by the Binance IEO Effect?

  • The Binance Launchpad has been causing token prices to surge upon listing.
  • So far, the launchpad has only listed five tokens.

Many people are aware of the Coinbase Effect, which is an interesting phenomenon that allows cryptocurrencies to surge in price around the time that they are listed with Coinbase.

This effect has been attributed to Coinbase’s positive reputation, but there are also suggestions of insider trading driving the price increases. Now, with Binance’s new launchpad for IEOs, it looks like the same can be said of this platform as well.

The biggest way for companies to bring in revenue for their altcoins happened originally in 2017 with the ICO boom. However, as multiple coins managed to gain significant funding without so much as an actual product, the SEC ended up cracking down, leaving the market to find other investment methods for anyone seeking to launch crypto assets, which included both Security Token Offerings (STOs) and Initial Exchange Offerings (IEOs).

IEOs started growing in popularity, thanks to the many launches of Binance. Binance quickly migrated their Binance Coin (BNB) from Ethereum to their own blockchain ledger, which was followed by their announcement to let other tokens do the same. After BNB was launched on the mainnet, Binance DEX came next, along with the Binance Launchpad for IEOs.

The Launchpad has been incredibly successful since it was implemented. On January 31st, BitTorrent’s token sale launch commented, bringing in $7.2 million within 15 months. The Fetch.AI token, the second launch, only took 22 seconds to sell out, establishing a $6 million hard cap.

IEOs provide a level of trust that the ICOs of 2017 didn’t have, primarily because it has started to reintroduce centralization. There is a centralized authority over it with Binance. At this point, the Binance Launchpad has launched a total of five tokens, other than the Bread token, which includes BitTorrent, Fetch.AI, Celer, MATIC, and Harmony.

https://ambcrypto.sfo2.digitaloceanspaces.com/2019/06/final2-768x178.png

The table above, published by AMB Crypto, shows the percentage that the token prices rose when the exchange decided to list them. For example, BitTorrent’s tokens were originally sold at $0.001865 with the public sale, which was its peak price. Fetch.AI is unfortunately down by 78% since the launch, though it rose by 294% at its peak price.

Clearly, the prices were positively impacted with the listing on the Binance Launchpad, much like the way that the Coinbase Effect has worked.

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