What is Delist in Cryptocurrency Assets?
Delist means to stop trading any asset. This concept, which is more familiar in the cryptocurrency sector, can also cover stocks. In this article, we will be discussing the concept of delist in the cryptocurrency sector.
New assets may join the cryptocurrency world every day, and some assets may cease to function. This action is commonly known as delisting. A delisted cryptocurrency is no longer available on the cryptocurrency exchange where it is listed. Therefore, traders will not be able to continue trading with the relevant cryptocurrency.
The delist is considered a negative development for the cryptocurrency market. Because the first question that comes to investors’ minds is “Why should it be delisted if it is a good crypto asset?” However, there are many reasons why a cryptocurrency asset may be delisted. The general reason behind delisting financial assets is that they fail to meet the conditions of the cryptocurrency exchange they are on. Delisting a cryptocurrency asset does not mean that it cannot be re-listed. The cryptocurrency asset may be relisted if it starts to meet the platform’s conditions again.
To take a broad look at the reasons for delisting a cryptocurrency asset, it is necessary to examine the reasons behind it.
Why Cryptocurrency Assets are Delisted?
The reason why cryptocurrency assets are delisted by an exchange may include not one but multiple factors. These factors are generally as follows.
Low Liquidity:
If a cryptocurrency asset has low trading volume and cannot provide sufficient liquidity, the exchange may delist it. Low liquidity can make trading difficult and vulnerable to price manipulation.
Security Concerns:
If vulnerabilities, poor coding or vulnerability to attacks are detected in a cryptocurrency project, the exchange may delist the asset. Exchanges implement security standards to ensure that their users keep their assets safe and aim to mitigate potential risks.
Legal and Regulatory Reasons:
When cryptocurrency projects fail to meet legal or regulatory requirements, exchanges can delist the asset.
Declining Interest:
Interest in a cryptocurrency project can wane over time. The community, development activities or collaborations of this project may decrease. Exchanges may delist the assets of inactive or inactive projects.
Fraud or Dishonesty:
When a cryptocurrency project is associated with fraud or forgery, when the team or founders behind the project show signs of untrustworthiness, exchanges can delist that cryptocurrency asset.
These can be key factors in delisting a cryptocurrency asset. However, assets can also be delisted by cryptocurrency exchanges for reasons that cannot be predicted at this stage.
What Happens to a Delisted Cryptocurrency?
Delisting a cryptocurrency means that the asset is removed from the list of the cryptocurrency exchange that will make this decision. In order for users not to be victimized, the correct method of application of this process is not to be carried out suddenly . Therefore, it is healthy for an exchange that is going to delist any cryptocurrency asset to first announce and warn investors about the issue, and then carry out the delisting process. A cryptocurrency delisted on one exchange may still be listed on another exchange. Users holding a cryptocurrency to be delisted can transfer their holdings to other exchanges or wallets within the allotted time.
The status of the delisted cryptocurrency asset and its impact on users can be listed as follows.
Liquidity Declines in Delisted Cryptocurrency :
A delisted cryptocurrency asset may experience a lack of liquidity as trading stops. This means that the asset cannot be easily traded on the market. Falling liquidity means asset owners could potentially face difficulties.
Price Affected:
The delisting of a cryptocurrency asset can lead to selling pressure among asset owners and negatively affect the price. Because the withdrawal of a crypto asset from an exchange can affect the balance of demand and supply.
Access Restricted:
Users holding a delisted cryptocurrency asset will not be able to trade on that exchange. This can limit users’ control over asset ownership and reduce trading opportunities. However, delisted assets may continue to be traded on other exchanges. At this point, investors can move their assets to another exchange.
Storage and Wallet Issues:
A delisted cryptocurrency asset may need to be transferred to users’ own wallets or cold storage methods. This means that users need to access the appropriate wallets and store their assets securely.
The reputation of the Delisted Cryptocurrency Project may be affected:
Delisting a cryptocurrency asset can negatively affect the reputation of the project. Issues such as security concerns or low interest may arise in relation to the delisted asset. This could reduce community support and general acceptance of the project. At the same time, the project’s development activities and innovation potential may also be affected.
Can Cryptocurrency Delisting Be Predicted?
Although this question cannot be answered with a clear “yes”, some of the following criteria can serve as a clue in this context.
For this, the cryptocurrency in question;
- Examine the trading volume.
- Look at the total supply, the circulating supply in the market and what the supply limit is.
- Check their GitHub activity to get an idea if they are being developed or not.
- Follow people who have a say in the project on social media.
- Evaluate the comments made about it on social media.
- Review software security and ecosystem suitability.
- Learn about the areas of use.
Long-term investment may be a strategy, but in order to avoid any victimization, it will be useful to follow the developments about the cryptocurrencies invested and not to disrupt the control process in order to take precautions against a possible delist situation.
How to Recover Cryptocurrency to be Delisted?
If it is certain that a cryptocurrency will be delisted and the relevant asset is held, action should be taken immediately. What can be done in this regard is as follows.
Reading Explanations:
You should read the statements made by the exchange where your cryptocurrency will be delisted and find out on which date the transactions will end. You can click here to follow announcements like these at ICRYPEX.
Divestment
The cryptocurrency to be delisted can be sold quickly on an exchange where it can still be traded.
Possibility of Change:
The cryptocurrency to be delisted can be exchanged for another cryptocurrency or fiat currency.
Moving to the wallet:
If the cryptocurrency asset to be delisted is not intended to be disposed of, it can be kept in a hot or cold wallet.
If a cryptocurrency is delisted, its liquidity may fall and its value may decline rapidly. It is therefore important to act quickly at all of these stages.
To summarize; Delist transactions in the cryptocurrency world can have serious consequences and create uncertainties for investors. Cryptocurrency exchanges may stop listing some projects for various reasons, such as security, regulation and liquidity. These delist events require investors to be vigilant and research projects and exchanges meticulously. Projects must be accountable to exchanges and communities and work towards the sustainability of long-term success. Investors should also develop safer investment strategies, focusing on risk management and diversification.
It is a fact that the cryptocurrency world is evolving and changing rapidly. Investors and project developers should therefore be ready to keep abreast of current developments and adapt to changing conditions. With careful steps and informed decisions, the cryptocurrency ecosystem can become more grounded and focused on future growth.