The Rise of Delistings on Crypto Exchanges
Crypto exchanges have been taking steps to streamline their offerings, resulting in a record number of digital tokens being delisted. While Bitcoin is experiencing a resurgence, many other tokens are being removed from major platforms.
According to data from Kaiko, a total of 3,445 tokens or trading pairs are currently inactive or scheduled for delisting. This represents a 15% increase compared to last year and a doubling of the figure from the previous year.
Leading Exchanges Taking Action
Coinbase and Binance, two major cryptocurrency exchanges, have been proactive in this delisting exercise. In fact, over 100 tokens have already been removed from these platforms this month alone.
In October, Coinbase eliminated 80 pairs, an unprecedented monthly figure for the year. Meanwhile, OKX has already delisted 172 tokens this year, with Coinbase following closely behind at 176 pairs.
Declining Trading Volumes and Liquidity
Despite the large number of available tokens, trading volumes across most exchanges have significantly decreased over the past year. There are currently over 1.8 million tokens available for trade on centralized and decentralized platforms.
The decline in liquidity can be attributed to events such as FTX’s scandals and subsequent bankruptcies. As a response, many exchanges are focusing on more popular and user-favored trading pairs.
The Strategy Behind Delistings
Analyst Jacob Joseph explains that the elimination of fragmented liquidity aims to enhance the trading experience for users by reducing spread and slippage costs. However, regulatory interventions also play a role in this trend.
Regulatory bodies like the US Securities and Exchange Commission (SEC) have classified certain tokens as unregistered securities, prompting exchanges to delist them in order to comply with regulations.
The Bigger Picture
While delistings may seem sudden, they align with the overall recovery of the crypto market. The top 100 tokens have experienced a 60% surge since December, bouncing back from a 66% slump the previous year.
Delistings are not a new phenomenon, as the crypto market witnessed a similar trend in 2018. This decline was mainly due to failed startup ventures that relied heavily on initial coin offerings (ICOs) and increased global efforts to crack down on scams and fraudulent activities.
Hot Take: Crypto Market Shows Bullish Trend Amid Delistings
The global crypto market has experienced a bullish trend over the past 24 hours, with a valuation above $1.2 trillion and a nearly 10% increase. This spike can be attributed to Bitcoin’s recent rally, fueled by the potential approval of a spot BTC exchange-traded fund (ETF).
Featured image from Unsplash, Chart from TradingView
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