Coinbase and Binance launch new currencies, who is suspected of insider trading?

This report observes the price trends of new coins on Binance and Coinbase one week before they are launched from November 2017 to February 2022 to determine whether the positive effects of the launch are reflected in the market in advance. These two exchanges were chosen because they have the largest trading volume in the spot market and have a greater impact on the prices of the listed coins.

For new currencies, we selected the trading pairs announced in the new announcement. Most new currencies are quoted in stablecoins such as USD, USDT or BUSD, and a small number will correspond to ETH. The price we selected is the opening price every hour, from 0:00 am (UTC) on the day of the announcement of the launch to 0:00 am 7 days ago. For example, Coinbase announced the launch of ETC on August 8, 2018, so the data we intercepted is the opening price every hour from 0:00 am (UTC) on August 1 to 0:00 am (UTC) on August 8. Due to the large price differences between different currencies, for the convenience of comparison, we have standardized all prices by dividing them by the first opening price 7 days ago (i.e. the first price data). Therefore, the first price is 1. Assuming that the final price of a currency is 1.5, it means that the increase in 7 days is 50%.

In addition, we will list the currencies with excessive increase (more than 1 times) in a table and search for good news in the same period one by one, trying to eliminate interference events. It needs to be explained that the new currencies we selected are based on announcements and news, and currencies outside this range are not collected.

Coinbase

Coinbase selected 135 new currencies, of which 17 currencies were listed at the initial price, so there was no price data for the past 7 days, so they were deleted. Finally, 118 currencies were included, and the results are shown in the figure below.

Among them, 18 currencies increased by more than 1 times, accounting for about 15.3%. The largest increase was SHPING, which was announced to be launched on January 20, 2022, with the highest increase of 6.6 times in 7 days. The following table shows the maximum increase of 18 currencies in 7 days (graphic data are all intercepted from the opening price of the last day, but the table data selects the highest price) and good news.

After removing these 18 currencies, there are 100 currencies left, and their price trends are shown in the following figure:

Taking the price of the last hour, the distribution is obviously right-skewed, with a median of 1.226 (up 22.6%) and an average of 1.243 (up 24.3%). This is excluding 18 currencies that have increased by more than 1 times. If all of them are included, the average will be as high as 1.476.

Of course, since most of the currencies were launched in the bull market, the market may have been on an upward trend one week before the launch. In order to eliminate this interference factor, we also counted the BTC trend of each currency one week before the launch as a comparison.

It can be clearly seen that the distribution of BTC's increase is relatively uniform, with a median of 0.992 (a decrease of 0.2%) and an average of 1.006 (an increase of 0.6%), with no obvious right-skewed distribution.

Binance

Binance has a total of 311 new currencies, of which 144 currencies have the same listing price as the initial offering price. Therefore, there is no price data for the past 7 days, so they were deleted. In the end, 167 currencies were retained, of which only 15 currencies increased by more than 1 times, accounting for about 9%, which is much smaller than Coinbase. The largest increase was SHIB, which was announced to be launched on May 10, 2021, with the highest increase of 10.3 times in 7 days. The following table shows the maximum increase of 15 currencies in 7 days (the graphic data are all intercepted from the opening price of the last day, but the table data selects the highest price) and good news.

Similarly, we use three charts to show the trend of Binance's new coins in the week before they are launched. The first one is a scatter chart, which contains 167 coins.

The second one is a trend chart. After removing the above 15 currencies, there are 152 currencies left.

Taking the price of the last hour, the distribution is slightly right-skewed, with a median of 1.051 (up 5.1%) and an average of 1.056 (up 5.6%). If the 15 currencies are included, the average is 1.225.

Similarly, we list the statistics of BTC at the same time as a comparison.

The median is 1.003 (up 0.3%), and the mean is 1.009 (up 0.9%), with no obvious right skew. There is no significant difference between the trend of BTC during the Binance listing period and the trend during the Coinbase listing period, which shows that the short-term market fluctuations have little impact on the short-term trend of the new currency.

Summarize

In summary, we compared the trends of new currencies on Binance and Coinbase in the week before launch and came to the following conclusions:

1. The growth of Binance and Coinbase's new coins in the week before launch generally surpassed that of BTC. The average growth of BTC in each time period was almost equal to 0, which shows that the launch news was reflected in the coin price in advance to a certain extent.

2. Coinbase's new coins saw a larger price increase than Binance's in the week before they were launched. Excluding outliers (increases greater than 1 times), Coinbase's new coins saw an average increase of 24.3% and Binance's was 5.6%.

3. In terms of outliers, Coinbase has 18 currencies that have increased by more than 1 times, accounting for about 15.3%, and the maximum increase within 7 days is about 6.6 times; Binance has 15, accounting for about 9%, and the maximum increase within 7 days is about 10.3 times.