Crypto exchange Bitpanda’s global expansion is going from bad to worse. But the Vienna-based company has a plan up its sleeve to rescue its new token, BEST.
Bitpanda launched a fully-fledged crypto exchange three weeks ago after raising $48 million in an initial exchange offering (IEO) for its BEST token. The token’s purpose is to pay for fees on the exchange, much like Binance Coin. In theory, it was sound strategy, as massive trading volume on the exchange would lead to the token's price increasing, making a tidy profit for its investors. But the reality is very different: the exchange flopped, traders dumped and the price crashed.
When the IEO for BEST took place from July 9 to August 6, investors piled in with $48 million, paying up to $0.11 per token. But things swiftly turned sour. On August 7, as soon as the exchange went live, large amounts of BEST tokens were immediately dumped and caused the price to drop by half, to $0.063—way below the IEO price—a worst-case scenario for any token offering. It took what Bitpanda’s CEOs Eric Demuth and Paul Klanschek bluntly described, in a letter to the community, as a “nosedive.”
To make matters worse, few people were actually using the exchange, meaning there was little use of the BEST token—its sole raison d’etre. In the first week, the CEOs said that less than $2.2 million a day was traded on the exchange. On some days the figure was as low as $555,000.
As a result, the BEST token was underutilized; its daily trading volumes were often less than $50,000 a day. And this continues to play havoc with its price.
While the token initially bounced back from its first day drop, and reached $0.083, its price has since continued to slide. It’s now worth just $0.072, and threatens to reach a new all-time low. Rather than hope for a turnaround, many decided to cut their losses and get out fast.
The remaining investors say they’re now stuck with worthless BEST tokens, and are hoping for a miraculous revival in price.
Meanwhile Bitpanda—which owns the mammoth’s share of the token’s supply—is attempting to save its token. But investors are growing wary of a company that has fallen so short of its lofty promises.
As my investment disappears, so does my trust [in Bitpanda],” tweeted a pseudonymous Bitpanda user known as Polophiker.
Another investor told Decrypt that the reason that the community had grown wary of Bitpanda is because it holds huge reserves of the coin—even though this is a fairly common strategy among token offerings.
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