Exchange Tokens 'May Decline' if Bitcoin Doesn’t Start a Bull Run

Exchange Tokens 'May Decline' if Bitcoin Doesn’t Start a Bull Run
(Source: iStock/MistikaS)

If the major digital assets, bitcoin (BTC) included, can’t prompt another bull market in 2020, exchange-based tokens may decline due to the possible trading volume shrinkage, says TokenInsight, a token data and rating agency.

Their latest annual report on the cryptocurrency spot exchange industry explains that the price trend of exchange-based tokens “has a synchronous relationship” with bitcoin. But also, as exchanges hold a stable profit model in the current crypto-assets industry, their tokens can go higher when there’s a massive trading volume, typically with BTC’s price going up as well. Hence, concludes TokenInsight, if BTC and other main altcoins cannot start a bull market in 2020, the price of exchange-based tokens may continue to be affected by the volume shrinkage.

Many exchange-based tokens had seen a positive performance in 2019, with mechanisms like token buy-back or burn pushing the price upwards. Exchange-based tokens showed a continuous upward trend in Q1 and Q2, and their prices remained relatively high even during the price decline in Q2 and Q3.

Top 10 exchange (centralized and decentralized) tokens

Meanwhile, as reported by, this year, we're likely to see a range of crypto-exchanges diversifying into new services and functionality. For the most part, such diversification will be part of an attempt to offer a range of trading options that will attract institutional investors and corporate clients, the kind which generally bring the bigger bucks.

TokenInsight also said that following a 28% decline in trading volume in Q4, since the profit margin of spot trading mainly depends on the continuous increase of digital asset prices, if the market continues to be depressed as currently expected, the centralized exchange industry will be under pressure for a longer period. However, the development of decentralized exchanges needs to wait for cross-chain technology breakthroughs or the overall maturity of the blockchain industry, they added.

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