Altcoins’ Hopes Dim as Top Exchange Adds More Decimals to Tokens
The growing use of Lightning Network protocol may be threatening the existence of altcoins, but the threat posed by crypto exchanges’ recent moves could be worse. One of the top exchanges, HitBTC, has announced on Feb. 11 that it will make lot size and price step changes to hundreds of tokens on its platform. In other words, more decimals are added to the crypto values of most tokens hosted by the exchange, which some suggest could eventually kill them.
Why upset with HitBTC?
It is no longer news that even big market cap crypto projects have already been cutting down staff. Also, not many investors are buying tokens at this point, either for loss of confidence in projects due to credibility and market issues, or because they already bought enough. Possibly, exchanges are feeling the brunt hence HitBTC devise a means to stay afloat. It could be recalled that just recently, Liqui exchange shut down; Cryptopia exchange was hacked; and there’s the ongoing investigation into almost $150 million reportedly stuck in QuadrigaCX. All these developments will reflect in a way on the token market where some are going to sub-sat prices due to low volume.
We've been receiving multiple requests from our community to give people more granular lot sizes.
It would allow people to trade in smaller sizes, opening the doors to trading for everyone.
Also, it would allow more flexible trading strategies.
And we listened.
— HitBTC (@hitbtc) February 12, 2019
The main reason HitBTC may have introduced the changes is probably to make room for liquidity. Current token prices are seemingly not getting much trading so adding zeroes would be expected to help move trades by allowing “people to trade in smaller sizes”. Though criticized as likely to hurt altcoins in a prolonged bearish market, the changes still leave out coins that have fair market valuations on the exchange. This points out that projects with products could have gained traction or the changes may not have affected much if there had been enough demand to buy.
Overall this “change” is going to be very misleading and detrimental to overall market price. What it’s going to do is snipe people into arbitration opportunities that don’t actually exist and allow YOU to make even more money from your transfer/deposit/withdraw fees.
— The Firewall (@BobTheFirewall) February 12, 2019
Projects’ share of blame
With additional decimals by HitBTC and selling pressure mounting on traders, new products have to be released or the entire crypto market surge for most tokens on HitBTC not to dip below current prices. That is, the decimal addition may not have come if investors have been made to show much interest in tokens. In other words, exchanges could not be blamed entirely for the current situation since they are in business to support crypto projects and provide liquidity. The development goes to show the current level of constraints crypto exchanges are now facing in their working relationship with the token asset market and what is likely to come.
There are hints that many altcoins would likely to die in the current bear market – though those that survive will grow stronger with time. However, as tokens may not be delisted from the HitBTC exchange, all token holders can only withdraw their assets from the platform to avoid the proposed changes being implemented. While that is not quite certain to happen.
As of press time, HitBTC is ranked the fifth largest exchange by 24-hour volume (~US$425 mln).