LEO now trading on Bitfinex with a sluggish start

The token sale was quite impactful, but there's not a lot of live trading yet.

LEO went live for trading on Bitfinex on Monday at 8am UTC, paired against BTC, USD, USDt, EOS and ETH.

It's a coin to watch for several reasons.

• What's LEO, and why is it?

  The backstory of LEO in brief is that one of Bitfinex's payment providers, Crypto Capital, allegedly ran into some issues then one thing led to another and Bitfinex ended up US$850 million short. So it borrowed money from Tether which consequently left Tether less-than-fully backed, and a lot of people and their lawyers had a problem with everything.

  Anyway, Bitfinex needed about a billion dollars fast.

  Then Bitfinex announced LEO, and reportedly sold the full $1 billion in 10 days.

  The token itself can be used for trading fee discounts and other things, and according to the whitepaper will be bought back at a fair clip of 27% of iFinex (Bitfinex parent company) gross revenue (minus Ethfinex) per month.

  iFinex reserves the right to buy back the tokens with funds recovered from Crypto Capital, as well as funds recovered from the Bitfinex hack, which was several years ago now.

Food for thought

LEO can be expected to have a sizable impact on the wider crypto space.

Firstly, even the most casual observers will be able to notice it on the charts. At its initial sale price, it would be ranked among the top 20 coins by market cap with a $1 billion market cap. Secondly, Bitfinex's impact on the wider cryptocurrency ecosystem means LEO's performance might have ripple effects.

Here's a crude graph to highlight at least one of the impacts of the token sale. It shows Coinbase Bitcoin prices in blue and Bifinex Bitcoin prices in orange.

While it's not possible to draw any conclusions from this with complete certainty, one of the safer things you can say is that the closing of the price gap was likely the result of the LEO token sale.

To recap, as the Crypto Capital drama hit, some massive price premiums started appearing on Bitfinex, presumably as a bit of a risk premium, plus customers having difficulty cashing out for fiat and therefore buying up cryptocurrency at a higher rate.

Then the LEO sale begins, and Bitfinex starts finding itself flush with additional cash and cryptocurrency from the sale. The price premium now disappears, presumably as a result of customers cashing out through fiat once again. Note that it's not immediate and it takes a few days for things to equalise, which is what you'd expect. By the time the LEO sale finishes, the price premiums have disappeared.

Now, let's turn our attention to the overall Bitcoin price movements around the LEO sale, as though it wasn't already there anyway. There was a big pump as the token sale went off, and then a big dump as it concluded.

There's a clear correlation there which might very well be completely coincidental, but is still difficult to ignore. It's worth noting that both the rise and fall are widely believed to be the result of whale motion.

So, if there is any connection between the LEO token sale and Bitcoin's price movements, there could be more to come as trading kicks off. Or maybe it's all just a coincidence and there's no more to come.

But discounting thoughts or whale cabals, price manipulation and other conspiracies, it could generally be more bullish than bearish, if it successfully restores Tether's backing and keeps Bitfinex running smoothly.

Either way, trading has commenced more sluggishly than you'd expect given all the attention paid to the token sale.

At roughly 17 hours since the start of the sale, LEO is showing fairly small price changes.

Usually the most-hyped tokens will pop up and then drop just as quickly after landing on an exchange, but that doesn't seem to be happening here.

Volumes are also well and truly subdued, with very roughly US$6 to $7 million changing hands since trading commenced.

Assuming a $1 billion market cap, that's a mere 0.6% to 0.7% of the total market cap changing hands. For perspective, Binance Coin's 24-hour trading volume is over 9% of its market cap, and many other coins will typically have even more.

For whatever reason, LEO trading has been extremely slow when you'd expect it to be jumping.

Potential reasons include LEO being off-limits to US customers, and that it's not yet movable on-chain. This is expected to be resolved on 22 May, following the completion of a smart contract audit.

Another reason might be because people are simply hanging on a short while to see where the prices go, or because they bought their holdings in a private sale at a higher price than the current market price, or because for any other reason they simply have no plans to sell so quickly.

As Bitfinex CTO Paolo Ardoino said, the exchange has a lot of big plans for the token in the future, beyond simply buying them back. Plus, exchange coins have tended to be one of the more consistently reliable types of cryptocurrency in existence, and it's not every day a brand like Bitfinex issues an exchange token.

How exactly it impacts the wider cryptocurrency ecosystem, and whether those potential impacts can be tied to the LEO token, remains to be seen.

Disclosure: The author holds BTC, BNB, ATOM, IOTA at the time of writing.

Picture: Shutterstock