- Research by analysts at Kaiko reveals a record 3,445 tokens were delisted, doubling figures from the previous year due to market shifts.
- Increased regulatory actions by the SEC have compelled exchanges to withdraw support, mitigating legal risks.
- Bitcoin’s value has been on an upward trend, with a rise of 100% in 2023, reaching $34,500 amid strong market optimism.
The cryptocurrency market is experiencing a wave of delistings despite Bitcoin’s remarkable resurgence. Data from Analysts at Kaiko revealed that a staggering 3,445 tokens or trading pairs have been delisted or rendered inactive this year, surpassing the total for 2022 by 15% and doubling the figures from the preceding year. Major exchanges such as Coinbase Global Inc. and Binance have removed over 100 tokens this month alone, with Coinbase delisting 80 pairs in October, the highest monthly number since 2021.
The decline in trading volume on most exchanges over the past year has been significant. Despite the increasing number of coins, currently exceeding 1.8 million tokens listed on centralized and decentralized exchanges, liquidity has drained from the market due to scandals and bankruptcies, notably the FTX incident. To counter this an analyst at CCData noted, “Eliminating fragmented liquidity offers a better trading experience to users by reducing the spread and slippage”.
Regulatory actions have also played a pivotal role in the delisting spree. The US Securities and Exchange Commission’s (SEC) designation of 19 tokens as unregistered securities in lawsuits against Coinbase and Binance in June led many exchanges to withdraw support for these tokens, avoiding potential legal repercussions.
Remarkably, these delistings are occurring even as most cryptocurrencies are rebounding from the widespread losses witnessed in 2022. A notable indicator, tracking the 100 largest tokens, has surged by approximately 60% since December, following a 66% decline in the preceding year.
Delistings have long been a characteristic of the crypto landscape, especially during the bear market of 2018. The aftermath of that period witnessed the demise of hundreds of tokens, primarily due to failed projects originating from the numerous startups that raised billions through initial coin offerings. In relation to this, Riyad Carey, an analyst at Kaiko, said,
This is the result of an explosion in the number of tokens, as well as aggressive listing of these tokens, during the last bull market,” said Riyad Carey, an analyst at Kaiko. “Many of these tokens/projects have faded away or folded in the bear market and liquidity and volumes are at multi-year lows, and exchanges will delist pairs that don’t generate enough in fees.
Bitcoin, now constituting more than half of the $1.3 trillion crypto market capitalization, has surged by almost 30% in the past two weeks. This optimism is fueled by growing expectations that an exchange-traded fund investing in Bitcoin might gain approval in the coming months. Bitcoin’s value has more than doubled this year, reaching around $34,500 after a 64% decline in 2022, which saw it reach a record high of almost $69,000 in late 2021.
