While alt-coins have been slowly recovering from the bear market that began in June, the folks at Poloniex have been quietly plotting to kill more alt-coins by delisting them this week.
The resulting decisions will cause panic among crypto traders, with many coins turning red for weeks and prolonging more exposure to price deflation due to dumping.
The greatest victims will be those who hold the coins that will be killed, or as they say in the cryptoworld, delisted.
But which coins are the ones that will be chosen?
Before I give my predictions on which coins will be delisted, let me review some of the interesting features of previous delistings.
Delisting Announcement
Unlike other exchanges, Poloniex delists altcoins in big batches. Part of the reason there is so much fear and complaints from users is because the delistings have wide-reaching effect and can destroy portfolios, especially for investors who like to trade most (if not all) altcoins on the Poloniex site. The process by which Poloniex alerts users follows:
An announcement is made on Poloniex's Twitter and in the "Notices" box on the Poloniex website which lists all the altcoins that will be delisted, and the delisting date that the coins will be removed from the website. (The coins can be traded until officially removed on the delisting date)
Anywhere from a dozen to over two dozen altcoins will be announced for delisting.
On the delisting date, the coins are no longer available for trading on the Exchange screen, but can be withdrawn to a wallet elsewhere in the "Deposits & Withdrawals" screen
Due to the abrupt nature of the announcement, users will dump the announced coins immediately, resulting in a 50-90% drop in value within hours. There can be a dead cat bounce, but not one that is all that profitable. Coins will remained depressed in value up to the delisting date, where they will crash even further.
Trading volume affects decisions
Obviously, the most popular coins will not be delisted, as these are traded frequently and provide plenty of exchange fees for Poloniex to make a killing on. So you won't see any of the top 10 cryptocurrencies delisted, or any of these coins that are Margined or Lended below:
Users have commented that trading volume as well as dead development are potential reasons for delisting. Poloniex does not give reasons why the coins are delisted, and is under no obligation to do so. The secretive nature of the announcements are part of the reason why users feel that many of the coins pump right before the delisting, as what happened in the last round in May. Instead, supporters of Poloniex say that the coins are likely to be delisted because of low trading volume that doesn't pay the overhead to keep those same coins around.
Here's today's Poloniex chart with some pretty amazing pumps that we haven't had in months:
Coincidence?
Notice the coins at the top of the list and the high proportion of typically lower volume ones (some are pumping right now).
Patterns in timing in the last 100 delisted coins
I reviewed the last 100 altcoins delisted by Poloniex and discovered some interesting patterns that I would like to share with you. By no means is this considered the official protocol by Poloniex, but the patterns can be used to help inform our decisions about when to be in certain altcoins... and when to jump out.
Timing of the delistings
Delistings of the last roughly 100 coins from 2015 to 2017 have occurred on the following dates:
May 2, 2017 - 17 coins
Jan 4, 2017 - 14 coins
Sept 5, 2016 - 27 coins!
June 3, 2016 - 9 coins
Feb 8, 2016 - 12 coins
July 21, 2015 - 8 coins
Mar 29, 2015 - 10 coins
The time between each delisting has been:
3 months: 1 (16.7% of the time)
4 months: 4 (66.7% of the time)
7 months: 1 (16.7% of the time)
Since the last time of delisting was May 2, 2017, there is a greater chance that the delisting will happen around the 4-month mark on September 2, 2017 (66.7%) than on December 2, 2017 (16.7%). We can safely ignore the first week of August, as that date has already passed.
Of course, Poloniex has the option of choosing another date entirely. Perhaps they will after reading this article!
Timing of announcements
The announcement is the point of most concern, though, since that is when the value drops enormously. Announcements for the above delistings have occurred on:
May 2, 2017 - Announced on Tue, April 18
Jan 4, 2017 - Sun, Dec 18, 2016
Sept 5, 2016 - Mon, Aug 22
June 3, 2016 - Sun, May 22
Feb 8, 2016 - Sun, Jan 24
July 21, 2015 - Wed, July 13
Mar 29, 2015 - Tue, Mar 15
Days of the week:
Sun: 42.8%
Mon: 14.3%
Tues: 28.6%
Wed: 14.3%
Weeks of Announcements:
Third Full Week: 4 (57.1%)
Fourth Full Week: 2 (28.6%)
Second Full week: 1 (14.3%)
The pattern of announcements beginning in 2016 are:
- Roughly two weeks before the delisting date, but not exactly 14 days
- A Sun, Mon, Tues or Wed in the third or fourth full week of the month prior to the delisting
We are entering the third full week of the month. The high rate of previous announcements in the third week (57.1%) combined with the high rate of delistings 4 months after the last delisting (66.7%) doesn't bode well for Poloniex low-volume alts this week.
Delistings incoming.
My Altcoin Picks
And now my top picks for delisting this week.
DRUMROLL
But first, let me explain how I came to predict the coins with the potential to be delisted.
Coinmarketcap.com has a wonderful feature that allows one to explore the market cap and volumes of cryptocurrencies from past dates. The page is located in the TOOLS menu under HISTORICAL SNAPSHOTS.
I chose the closest date to review prior to the announcement date of each delisting. I noted the position of each coin in terms of market cap and not volume, as volume is not that great of an indicator in this exercise since the volume of a delisted coin in 2017 will most likely be much greater than those of 2016 or 2015. But market cap position is an ordinal ranking that doesn't require any sort of weighing. (In other words a coin with a position of 250 in 2017 is going to have low volume in a similar way that a 250 position coin in 2016 will).
My goal was to find the red line, that is, the line that most coins could be considered "open game" for delisting in terms of position.
I found that the red line was 40, and that coins that have a position of 40 or more are most likely to be candidates for delisting. (However, this doesn't mean that coins over 40 position ranking will absolutely be delisted.)
Bottom line: Coins that are in the top 40 in terms of market cap are safe or pretty safe. Perhaps Poloniex will begin dropping coins positioned in the top 20 or 30, but I doubt that to be the case in the future.
The coins listed on Poloniex that are currently not in the top 40 in terms of market cap are:
AMP (Position Rank 139)
ARDR (50)
BCY (187)
BELA (224)
BLK (138)
BTCD (72)
BTM (274)
BURST (173)
CLAM (144)
DCR (47)
DGB (52)
EMC2 (195)
EXP (127)
FLDC (228)
FLO (214)
GAME (46)
GRC (157)
HUC (321)
LBC (115)
NAUT (294)
NAV (157)
NEOS (184)
NMC (122)
NOTE (241)
NXC (145)
NXT (55)
OMNI (150)
PASC (245)
PINK (259)
POT (107)
PPC (92)
RADS (134)
RIC (285)
SBD (280)
SJCX (847)
SYS (76)
VIA (124)
VRC (200)
VTC (137)
XBC (209)
XCP (90)
XPM (197)
XVC (266)
I am completely out of all these coins at this point, just to be safe until August 31st, which is the Thursday of the fourth full week of the month.
My predictions below are a bit less conservative for several reasons. First, this summer has seen many hot ICO's hit the market, and many of those are in the top 40. Poloniex typically has mainly top 40 coins, but right now many of those are shifted into the top 100 due to the influx of the ICO coins. Second, some of the coins are tied to good products or development teams, and have just had the wind knocked out of them. Third, coins that are in margin accounts at Poloniex have not been delisted in the past.
Taking out the coins in the top 100, margin coins, and historically solid coins, we have:
BCY (187)
BELA (224)
BLK (138)
BTM (274)
BURST (173)
EMC2 (195)
EXP (127)
FLDC (228)
FLO (214)
GRC (157)
HUC (321)
NAUT (294)
NAV (157)
NEOS (184)
NMC (122)
NOTE (241)
NXC (145)
PASC (245)
PINK (259)
POT (107)
RADS (134)
RIC (285)
SJCX (847)
VRC (200)
XBC (209)
XPM (197)
XVC (266)
My prediction list has 27 coins, which ties with the most coins delisted by Poloniex on Sept 5, 2016. I don't believe that all 27 will be delisted, but each stands a good chance. Do you agree with my choices?
I won't be in any of them until September, just to be on the safe side.
Image: HannahJoe7