Original title: In-depth interview: The secrets of announcement trading and how to imitate 'Formula News'
Original author: A Ray’s New World, BlockBeats
Since October, the listing on CEX has become a new science. Whether it's ACT, PNUT, or MOODNEG, countless people have become wealthy from these new tokens. Every group of players ambushing these potential listed tokens holds their breath when a CEX releases an announcement, hoping to be the lucky one.
However, besides ambushing in advance, there is also a group of players like Little Z who focus on studying CEX announcements, forming a set of 'announcement trading' strategies. Little Z, leveraging his knowledge of CEXs, not only successfully ambushed some potential listings (like CAT MOODNEG) but also gained considerable profits after the CEX announcements (like PEPE, ACT, OL). Thus, we specifically chatted with Little Z about the lesser-known announcement trading.
Q1: When did you start paying attention to 'announcement trading'?
Little Z: I entered the market during the last bull market in 2021, and I consider myself an old player who has experienced a round of bull and bear cycles. In 2022, I saw an article by the founder of Formula News on Zhihu, and inspired by Vida's article there, I began to study CEX announcements. In fact, there are many opportunities in announcements, but often people overlook them. For example, during the last bull market, the listing effects of Binance and Coinbase were very good, and many people profited significantly by ambushing in advance. However, some also chased after the announcements and managed to get results.
Moreover, during the last bull market in 2021, there were not as many VC coins as in this bull market. For example, some CEXs would have a market cap of hundreds of millions or tens of billions upon opening, only to cut leeks after listing. At that time, many coins only had a market cap of a few million or tens of millions, so these 'announcement traders' could make considerable profits by ambushing in advance. Some smart money would dig out some testing vulnerabilities in announcements, discovering the loopholes and ambushing in advance. Meanwhile, in this round, the listing effects of Upbit and Binance are also quite good, but it seems that not many people in the Chinese community are paying attention. I think this track is still relatively blue ocean, so I started researching this area later. However, the gameplay this round is quite different from the previous one; the listing effect of Coinbase is not as strong, and there are very few small market cap projects listed on exchanges.
Q2: Can you give some examples of testing vulnerabilities? How does smart money discover these vulnerabilities?
Little Z: I will give a few simpler vulnerabilities. The first vulnerability is the negligence of engineers. Taking a certain CEX as an example, CEX not only has a main website but also different announcement pages. For example, when they need to issue some listing announcements, they will post them on the announcement page. Therefore, there are many interfaces on different websites, and sometimes developers or testing engineers may overlook something. They might expect to release a news announcement at 10 PM, but this webpage leaks early in the backend at 9:50 PM, and then the formal announcement comes out 10 minutes later. This is a relatively common vulnerability.
Another example is the vulnerabilities of testing engineers. For example, a testing engineer at a certain CEX might repeatedly test coins from a certain chain using the same wallet. For instance, if CEX wants to test a token B on the Solana chain, and the last time the engineer tested token A. Hence, this wallet might be one that the testing engineer has been using all along. Some chain experts can capture potential listing information by monitoring these testing wallets.
Q3: How do you view this round of Coinbase's listing effect? Why is it much worse compared to the previous round?
Little Z: The performance of Coinbase in this round is indeed not as eye-catching; the beneficial effect is not as strong as in previous years. I believe this is mainly due to regulatory reasons. However, there are still some coins with good listing effects. For example, in the RWA sector, ONDO initially launched on Coinbase and then surged several times. Another example is AERO, Aerodrome Finance, which is a DEX on base; when it was listed on Coinbase at the beginning of this year, the price was only 0.09. After being listed, it began to rally, reaching a peak of 2.3 dollars, which is about a 20-fold increase from the bottom. Of course, this is also thanks to its relatively low market cap after listing, as AERO started with only a market cap of 10 million dollars, making it easier to pump.
Besides the low market cap mentioned above, there are also some high market cap opportunities, such as some meme coins that were listed. For example, the recent PEPE surged 50% after being listed on Coinbase. Of course, there are some other factors involved, like Upbit and Robinhood. However, meme coins like WIF and FLOKI also saw increases of over 30% after being listed on Coinbase. Overall, while opportunities still exist, this round Coinbase may be relatively average due to regulatory reasons. However, this bull market has sparked a wave of innovation from the base. If Ethereum has a chance for salvation, the only savior lies within the base ecosystem. Currently, all interesting innovations within the Ethereum ecosystem, such as new concepts like AI pump.fun, are blossoming in the base, while other L2 chains are basically dead chains.
Q4: What aspects of announcement research are you currently focused on?
Little Z: During the last bull market, I was still in a novice phase, blindly researching here and there, sometimes researching leverage, sometimes contracts, sometimes chain games. In fact, I only started studying announcements during this round from 2023 to 2024. A friend of mine developed a monitoring program similar to Formula News that can track more CEX announcement information. Besides a few leading CEXs, there are also some second-tier CEXs that I’m paying attention to.
After every announcement from a CEX, I study to see if there are any opportunities. I analyze the content of the announcement and its news effect, and continually review. Later, I gradually learned about news trading, or what is now popularly called news-driven trading. For example, the well-known Formula News has made a profit of a million dollars through this 'news trading'. Of course, the trading method of Formula News requires some technology and is not suitable for everyone to apply this strategy. Therefore, I began to carefully study some manual trading opportunities, which are more friendly for players without much technology.
For example, there was a case of a16z's Eliza with a dispute over capitalization. It follows the same logic as Neiro, but the latter was listed on leading CEXs; can it be replicated? I think not necessarily. Eliza also had controversies regarding the 'community' and 'conspiracy group', with both sides fighting fiercely. At that time, the uppercase ELIZA surged much more than the lowercase version, leading many who relied on Neiro's logic to chase the lowercase, causing many to get trapped. At the time when the debate began, I also didn’t enter, just observing. The deciding factor for me was when I saw the HTX announcement stating that HTX would list the lowercase, which is when I began to enter the market. Because this indicated that the CEX supported lowercase tokens. As a result, the lowercase ultimately surpassed the uppercase.
In fact, it's not just the leading few CEXs; the announcements from various CEXs hide the treasure codes, but they need to be combined with specific hotspots, the macro environment, the fundamentals of tokens, etc. Specific issues require specific analysis.
Q5: Can you introduce us to more examples of 'announcement trading'?
Little Z: Of course. For example, there are many opportunities in the recent announcement on OKX. For instance, the token OL, I bought it at a price of 0.025 and sold it at 0.1. Actually, very few people noticed such opportunities. On November 18, OKX announced that it would launch spot trading for Openloot's native token OL. The deposit time opened at 2 PM that afternoon, the collective auction time was from 8 PM to 9 PM on November 19, and the opening time was 9 PM. Most people stop reading here, and might not even click on the announcement. Let's take a look at the fundamentals of Openloot. Openloot is the NFT trading platform for the game bigtime, where users can use OL as a payment method when purchasing or renting, buying time crystals, or purchasing NFTs from major sales. The initial circulation of OL is only 200 million, while the total supply is 5 billion, resulting in an extremely low initial circulation rate. The game token bigtime also started with a very low opening price. However, bigtime initially restricted trading to certain regions, preventing Chinese users from trading unless they placed orders through the API or deposited bigtime into the exchange. Therefore, many people are not aware. It opened at 0.002 and after a day, it skyrocketed several dozen times.
So after studying, I believe OL has the genes of the previous bigtime low opening. Meanwhile, during the collective auction phase on November 19, the auction price of OL was around 0.02 (it eventually opened at around 0.025). At an estimated price of 0.02, OL's circulating market cap was only 4 million dollars. To take a step back, if you did not manage to buy the low-priced OL during the collective auction, OL maintained a market cap of around 10 million for a long time after opening, and the risk-reward ratio is still very favorable.
Another example is the recent Morpho. Although MORPHO's market cap is not as 'cheap' as OL, opportunities still exist. First, it's still about researching the project's fundamentals. MORPHO is an old DeFi project from 2021, just like OL, with a total supply of 1 billion tokens but only 100 million in circulation, giving it a total market cap of about 100 million dollars. A market cap of 100 million dollars is neither high nor low, and in most people's eyes, it does not have a favorable risk-reward ratio. However, on the afternoon of November 21, from 5:05 to 6:05, MORPHO started a collective auction. At one point, the auction opening price reached as high as 4 dollars, yet on-chain MORPHO initially fluctuated only around 1 dollar. After seeing the auction price, we had about an hour to withdraw tokens on-chain and deposit them into the exchange. Even if the withdrawal speed was slow, there were still 2 hours after listing to smooth the price difference completely.
So the core is still to study CEX announcements, to analyze all CEX announcements, and to see if there are any opportunities that are not easily discovered.
Q6: After seeing each exchange announcement, what strategies do you apply?
Little Z: You need to look at the announcements from different types of exchanges. Some reflect the time for you, such as the announcement about OL's new listing we discussed. It was issued two days in advance, giving you ample time to research the fundamentals and information about this coin. For instance, what is the initial circulating supply for gold miners, or what is the cost for early players? Additionally, how much is the token's initial circulating supply and how much is locked? How much is actually circulating and sold? How much is there for each different exchange? This type of announcement gives you plenty of time to study.
Another type of announcement gives you no time to research; you need to be prepared to ambush in advance. For example, when the ACT coin was listed on BN, as soon as you see the announcement, you should immediately check its fundamentals, such as market cap and liquidity. Then quickly buy according to your strategy. Usually, the beneficial effect of spot trading is far greater than that of futures. When you see that ACT's market cap is only tens of millions, you should buy immediately because the risk-reward ratio is very suitable. The targets that are listed with a market cap of tens of millions can be said to have a very high cost performance. At the same time, you should also review and summarize, such as why these coins are listed and what their fundamentals are like? What strategy should I adopt the next time I encounter such a situation? However, such spontaneous announcements require speed. News from Formula News has made a lot of money this way, and after the ACT incident, I believe everyone is gradually understanding their trading method. Some people even follow their addresses specifically.
Besides spot announcements like ACT, there are also contract announcements. It is generally believed that the listing effect of spot trading is far greater than that of contract trading. For instance, MOODENG only had a market cap of 60 million before listing, and it had been washing out for a long time. Such coins, while only having contracts, had a low enough market cap, and the fundamentals at that time were very good, so even if they were listed on contracts, there was a strong listing effect. Buying MOODNE at that time with its market cap would probably yield a maximum loss of 50%, but once it was listed on Binance's spot market, it could potentially see a 3-5 times increase, making the risk-reward ratio quite favorable. This kind of gameplay is playable, but if a certain coin's market cap has already reached five or six hundred million, then whether ambushing early or not, it’s not very suitable.
Q7: What do you think about projects from other ecosystems? For example, the recently popular Desci concept.
Little Z: The Desci narrative actually started appearing in 2022, but it was during the bear market. At that time, the market had no liquidity.
So this concept did not hype up. During the bear market from 2022 to 2023, the founder of Coinbase invested in a project called RSC, and he often casually promoted his project on social media. For a long time, there was no noise, but in December last year, it suddenly exploded.
Later, it fell silent for a long time until this year when BN announced investments in Bio, including some actions regarding Desci by CZ and V God in Bangkok; I won't go into details here. Because of these triggers, this year the concept of Desci has reignited. Desci definitely belongs to a relatively powerful narrative, but this narrative was pushed out by the 'top stream' rather than naturally fermenting from the masses. Such a strongly pushed concept is hard to say.
For example, some concepts led by Coinbase, Depin. Depin is currently a very quiet sector; basically, you see everyone talking about 'meme' or 'AI', and hardly anyone discusses Depin anymore. At that time, Coinbase listed many Depin tokens, such as MOBILE HONEY, and later BN also 'followed suit' by listing IO. However, such strongly pushed concepts may not necessarily be well-received by the market, and the results are already clear. Desci is also of this type, so I think Desci requires thorough research, seizing the opportunity, and responding flexibly.
