Category Archives: Binance Bump

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The Binance Bump: Benefit or Risk?

Binance usually has daily trading volume in the USD 0.5-1 billion range, often putting it in the #1 spot relative to all other crypto exchanges in the world. Getting listed on Binance allows a crypto to be traded worldwide, and generally leads to a price rally. The price rally when a new crypto is listed on Binance is being called the Binance Bump.

The Block Crypto did an analysis of the Binance Bump. There are 165 cryptos listed on Binance, but 42 of them were removed from this analysis due to missing data, being listed around the time Binance itself launched, or being a stablecoin. This leaves 123 cryptos in the analysis. The analysis is separated into 4 statistics to reveal the short-term and long-term effects of a Binance listing, the change in price from pre-listing to the highest price on the day of the listing announcement, the 24 hour change in price from the day before the listing announcement to the day of the listing announcement, the 1 week change in price following a listing announcement, and the 30 day change in price following a listing announcement.

There is on average a 51% increase from the price before the listing announcement to the highest price on the day of the listing announcement, although the median increase is 29%, suggesting outliers are driving the average much higher. The 24-hour change from the day before the listing announcement to the day of the listing announcement saw an average price increase of 27% and a median increase of 12%. Clearly, the day a crypto is listed on Binance usually coincides with a rally, and this is the Binance Bump.

Longer term, the returns dissipate. In the 1 week after a listing announcement, the average price increase is 2% with a median price increase of -11%. Therefore, after a brief rally, the price of a crypto that is just listed on Binance tends to dump below the price it was previous to being listed. The Binance Bump could be compared to a pump and dump, where speculation drives a rapid rally, followed by a rapid price crash as the original whale speculators dump their holdings to make quick profits.

The 30-day price change after a listing on Binance is somewhat confusing, with an average increase of 37% while the median is -15%. The average would indicate that the Binance Bump is sustained long-term, but outliers like EthLend which had a 997% 30-day return after being listed on Binance, are skewing the average. The median tells the real story, which is, cryptos that are listed on Binance tend to pump for a very short amount of time and then dump, with the effects of the dump lasting for an extended period of time.

The Binance Bump is similar to the Coinbase Effect, where cryptos that get listed on Coinbase always rally, at least so far. Coinbase is the largest exchange headquartered in the United States, and getting listed on Coinbase makes a crypto easily available for U.S. traders and investors. Ethereum Classic jumped 25% after being listed on Coinbase, 0x spiked 50%, Bitcoin Cash soared 140%, Ethereum surged 30%, and Litecoin rallied 130%.

Generally, the Coinbase Effect leads to a more sustained price increase long term, while data shows that the Binance Bump has beneficial effects on a crypto’s price for only about a day.

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