Blog Crypto Crypto Presales: How You Can Get Involved

Crypto Presales: How You Can Get Involved

date January 29, 2022 time 5 min read 1647 views

Dreaming of getting in on the “next big thing” before anyone else? Being part of a crypto presale is one potential way to do it—but as with every way to money, it’s not quite as easy as it sounds. Let’s walk through the process, along with the risks involved and how to manage them.

If you’d bought bitcoin ten years ago, you’d probably be reading this on a gold-plated iPhone in your mansion right now. But maybe you’ve already played that same thought to yourself a million times and don’t need me to rub salt into the wound. Still, without dwelling too much on the “what ifs” of the past, we can all see the cryptocurrency world gives us some great opportunities—and some of the best are found at crypto presales.

But great returns always come at a high potential cost, so it’s important to approach crypto presales with caution. To help you do exactly that, we’ll run through how crypto presales work and the risks you need to be aware of.

What is a crypto presale?

A cryptocurrency’s initial coin offering (ICO) is the blockchain world’s equivalent to the  initial public offering (IPO), which is what companies hold when their stocks first become available to trade on stock market exchanges. But while protocols hold an ICO is when a coin is launched onto exchanges like Binance, this isn’t necessarily the first opportunity to invest.

Cryptocurrency presales give you an opportunity to be an early investor in blockchain projects.
Cryptocurrency presales give you an opportunity to be an early investor in blockchain projects. (Source: Unsplash)

In many cases, there’s a stage that comes before this: the pre-sale (which gets its name because it comes before the ICO).

Sometimes, only specific investors can participate in cryptocurrency presales—these are known as investor-only sales, and they’re designed for bigger investors who can afford to give huge sums. However, not all presales are exclusive—many are open to the public.

Why buy in a presale?

Presales tend to be popular among investors because they present an opportunity to get cryptocurrencies at a low price—and sell them on later to make a profit. 

After all, finding something new before it catches on is the name of the game here. Once a token gets onto a major exchange like Coinbase and Binance, it gets opened up to a whole new market. A price rise is likely to follow (but this isn’t a given as some coins may not gain traction).

Plus, because most protocols have a limited coin supply (a feature that helps to keep them valuable), the value of coins should theoretically increase as the supply available to buy decreases.

So, we’ve established why presales can be a solid crypto investment strategy. But you might be wondering what’s in it for the blockchain projects to pursue this strategy instead of just heading straight to an ICO—we’re about to spill the beans.

Why do protocols opt for presales?

Many protocols opt for crypto presales because it gives them the chance to raise funds they can use to develop their projects faster. Perhaps they need to hire more people or pay for marketing campaigns. Going back to the stock market equivalency, companies take a similar approach when carrying out funding rounds before their IPO (which the public can’t access).

A recent example of a successful crypto resale is TFLOW, which managed to raise $400k from 300 investors in its presale. It’s not hard to see how you can put a sum that substantial to good use.

How to buy pre-sale cryptos

At this point, you might be wondering how you can find out about these crypto presales. Most early investors earning interest on cryptos are active members of the crypto community, which allows them to keep their finger on the pulse when it comes to upcoming events. For instance, there are plenty of active communities on Reddit and Twitter (which you can find pretty easily through the search bar). You might even find out about a Discord or Telegram group if you stick around for long enough.

Could you invest in the next bitcoin or ethereum before they make it big?
Could you invest in the next bitcoin or ethereum before they make it big? (Source: Unsplash)

Or take the old-fashioned route and stick to Google—the choice is yours.

However, make sure to research current trends as well as intelligence about presales. Returning to the example of TFLOW, the project in question is a DeFi protocol based on the Binance Smart Chain that makes use of AI to help users invest smartly. Considering the popularity of decentralized finance and AI in recent times, it makes sense that this would prove popular among investors. Yet another copy of Dogecoin? Not so much.

You’ll also need to act quick. It’s not uncommon for presales to sell out within a matter of minutes—so set a timer on your phone and be ready to go.

Risks of crypto presales

We’ve already hinted that crypto presales can be risky business, but let’s look at the risks involved in more detail. For the sake of completeness, we’ll cover both the risks to investors and those holding the presales.

Risks of investing

Buying a cryptocurrency before it becomes an established coin can be a route to enjoying those 10000% returns we all dream of. But the instruction manual to getting there isn’t exactly as easy as buying an altcoin in a pre-sale and becoming a millionaire. The coin has to go on to be successful—and with new cryptocurrencies being launched all the time, that’s far from a guarantee.

Even when you know how to buy pre-sale crypto, make sure you’re aware of the risks.
Even when you know how to buy pre-sale crypto, make sure you’re aware of the risks. (Source: Unsplash)

It’s just as likely (if not more likely) that the value of a cryptocurrency could drop close to zero eventually—and this could happen even if your investment sees some initial traction. Many cryptocurrencies see an influx of investment when they first get listed on an exchange but get lost into the void shortly after.

So as well as needing some luck (or expertise, depending on your perspective) to pick the right cryptocurrencies to invest in, you’ll also need some emotional mastery. Can you figure out when to HODL and when to sell without being too greedy?

Plus, the usual problems associated with cryptocurrency investment also apply to crypto presales. Namely, there are minimal regulations surrounding cryptocurrencies and limited protection for investors. Although mainstream institutions have begun to accept Ethereum and Bitcoin in recent times, there’s still a long way to go.

Risks of holding crypto presales

You might imagine that if a crypto project manages to sell a good amount of tokens in its pre-sales but the coin goes on to be a flop, the project still cashes in from their initial funding. But that’s not quite how things go.

If lots of initial investors sell their holdings just the coin launches publicly, it’s a sign that those investors are “dumping” because they didn’t have much faith in the project from the get-go—leading to a downward spiral. In some cases, they’d be better off skipping the pre-sale altogether to avoid this issue.

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