Why newly listed tokens keep crashing

New token listings resemble the stock market on steroids. Without the guardrails of traditional finance, prices swing wildly, making—and more often breaking—fortunes in days, if not hours. Binance exchange is often the listing destination of choice for many of these tokens, which offer traders high-risk bets and the chance to chase the next market sensation. 

However, a closer look at its listings suggests that these opportunities are statistically bleak. Some analysts argue the odds are closer to zero, as most new Binance listings follow a predictable pump-and-dump cycle, with no meaningful recovery afterward.

This raises a key question: Is this just the nature of today’s market, or are centralized exchanges actively driving unsustainable speculation?

Recent Binance token listings

Many new token listings at centralized exchanges follow a similar pattern. Prices skyrocket within hours of listing, then crash soon after to stabilize at lower levels.

Here’s a breakdown of all Binance’s new listings since the start of the year:

• LAYER (DeFi) – Listed on Feb. 11, dropped 50% from its listing high.

• TST (Memecoin) – Listed on Feb. 9, dropped 80%.

• BERA (L1 Blockchain) – Listed on Feb. 5, dropped 38%.

• ANIME (Culture Coin) – Listed on Jan. 22, dropped 74%.

• TRUMP (Memecoin) – Listed on Jan. 19, dropped 82%.

• SOLV (DeFi) – Listed on Jan. 17, dropped 78%.

• COOKIE (MarketingFi) – Listed on Jan. 10, dropped 74%.

• AIXBT (AI) – Listed on Jan. 10, dropped 67%.

• CGPT (AI) – Listed on Jan. 10, dropped 68%.

• BIO (Biotech) – Listed on Jan. 3, dropped 88%.

So far, only Berachain (BERA) appears to have a chance at rebounding, thanks to strong fundamentals and an engaged community. The fate of KAITO (an InfoFi token that was listed on Feb. 19) also remains uncertain. But across every sector—DeFi, AI, memecoins, biotech—the pattern repeats.

Related: Bybit exchange hacked, over $1.4 billion stETH moved

Are Binance listings uniquely bad?

Some analysts argue that all new tokens are bound to pump and dump. However, recent listings on other exchanges suggest otherwise. For example, IP (decentralized IP management), listed on Gate.io on Feb. 13, has since surged by almost 5x. Another example is HYPE, which was listed on KuCoin on Dec. 7 and performed well.

In some cases, when Binance lists tokens that already are traded on other exchanges, the familiar pump-and-dump pattern emerges as well. For instance, CGPT had been trading since April 2023, yet its Binance listing in January briefly doubled its price—before crashing below pre-listing levels.

Another example is CAT, which gained 54% on its Binance listing day on Dec. 17 before collapsing 86%. VELO token, which traded since 2022, jumped 147% upon its Binance listing on Dec. 13 before losing 83%. 

Interestingly, the VELO listing on Kraken on Feb. 18 had no major price impact.

Why do CEX token listings pump and dump?

Several factors—alone or in combination—could explain why newly listed tokens dump when trading begins at centralized exchanges.

The most obvious reason is that they provide an ideal exit opportunity for insiders and VCs. Without vesting restrictions, project backers can immediately offload their holdings, cashing out before any real market demand has a chance to form. This could be a signal of the project’s lack of long-term interest or any real utility.

Another contributing factor is limited initial supply and low liquidity. When a token debuts with a restricted circulating supply, early buyers drive prices up quickly. In this case, as more tokens become available—whether through team unlocks, vesting schedules, or liquidity injections—the artificial scarcity disappears, and the price is set to correct.

Finally, over-engineered hype and speculation could play a major role. Exchanges like Binance have a huge user base, and their brand recognition can create what can be described as a “casino effect,” where traders rush in expecting quick and explosive gains rather than sustainable value.

It is also possible, at least in theory, that exchanges can artificially inflate demand, prompting traders to rush in and buy at any price. There is no concrete evidence of such manipulation, but Binance has previously faced allegations of wash trading and market-making tactics designed to inflate demand and trading volume.

Binance itself, however, emphasizes that it has a “robust market surveillance framework that identifies and takes action against market abuse.”

While the above analysis of the recent listings is far from exhaustive, it suggests that some exchanges’ listing mechanics favor short-term speculation over sustainable project growth. By prioritizing trading volume, the exchange benefits from the hype cycle, but this approach risks eroding user trust and drawing regulatory scrutiny. 

Centralized crypto exchanges are not the only player fueling the hype around new token launches. Even the Argentine president Javier Milei has recently been spotted doing the same. Additionally, some CEXs like Binance do attempt to mitigate some of the risks by labeling new listings as “seed” investments and requiring users to acknowledge their high-risk nature.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.