How do exchanges influence crypto prices?

By Nikita Kosmin

If you’ve read our last article on the way taxation can influence crypto prices, you know that the financial market with its many vices is also capable of providing tangible gains for people with relevant expertise.

The solution is getting the right information at the right time. We provide plenty of statistics and, what’s more important, real-life feedback, which is the key to finally making up your opinion, but here are a few questions to ask yourself after/while/before using our service:

How will the company I choose be performing in the next few months/years? What are the prospects? Can I predict its course with any degree of certainty?

As a way of de-mystifying the process, hopefully, a little more, we have added the article after that (which will help you figure out pretty much which factors influence which way a project is going to go).

When you’re considering which project is the best for gainful allocation of your funds, it’s always a good idea to analyze the exchange-project dynamics. Here are a few meta-deals to keep in mind.

Prestige

Exchanges are a major factor when it comes to token prices and prospects, states Igor Dovganov, a financial analyst at Vladimir Smerkis’s The Token Fund. “How does getting listed on popular exchanges affect cryptocurrencies? Most projects dream to get onto Binance, Bitfinex, Bittrex and other major popular exchanges, which is often seen as recognition, success, and this means the token price can potentially grow”.

We will be doing a series of articles on dealing particularly with exchanges, so keep an eye out for our publications. The next series of articles will start with taming Binance (the complete works), and then we’ll move on to other exchanges.

Manipulation

Do exchanges manipulate the crypto market? The question has been the apple of discord for quite a length of time now between many experts in the field. One example of this is the 2013 Bitcoin price spike from $150 to $120o which seems to have been executed by bots. This practice is not uncommon. You will find more information on front-running and the answer to it here, although quickly, the quick answer to the question is using decentralized exchanges: if the account book is completely open, no-one (we think) is conning you.

On a larger scale, there have been inquiries from the US government aimed at some exchanges after a range of tactics aimed at making quick money, from raising trading fees by 400% like Gemini did or getting hefty liquidation gains by pumping at Bitfinex. More on the subject here (warning: 90% financial slang level, bring a friend from Wall Street). The bottom line is that it is very tempting for exchanges to manipulate token prices for obvious reasons (millions can be made in a relatively short space of time by spoofing and front-running), and the only solution to this is transparent business practices. Decentralised exchanges are the best but if you have been with us for a while you already know that). We also try to enforce as much transparency and accountability as possible by using blockchain, AI, and digital signatures, and you can read about all of it in our latest releases.

Technological capabilities of new blockchains

Also, Igor suggests, projects that use new blockchains (NEO, QTUM) have a more difficult time getting onto exchanges as opposed to Bitcoin, Litecoin, Ripple, Bitcoin Cash, Ethereum (+ ERC20 tokens in this network), and Ethereum Classic blockchains. Whether your project of choice is using a commonly accepted blockchain is a factor.

While Forbes firmly states that “blockchain is out of beta” for good, we still somehow think that all blockchain is still in test-mode, and it is likely witnesses may still be found in the code, which means the new forms are even more riskier, although (maybe) more promising.

Ultimately

We hope we’ve cleared things up a little. You can always find support on our site or within our telegram channel. We hope you use the information we have provided for your benefit and carefully research the projects before making the decision. Cross-referencing the reviews is also one of the most reliable methods of finding out about a project’s authenticity. We are also employing more sophisticated protection techniques like digital signature verification and so on. Stay in touch and let us know what you think.