Investing in cryptocurrency is definitely not a one-size-fits-all type of investment. There are several considerations to take and, therefore, many strategies available that can determine the success of your investment when looking to diversify your protfoilo.
Now, there certainly is no right answer, but there are several pointers within the cryptocurrency market that can help you navigate through this decision.
In this article, we will go through the pros and cons of investing in presale coins and coins that are already well-established. Beyond this, we will have a look at several other considerations that may help you make the best decision for yourself.
What Are Presale Cryptocurrency Coins?
These types of coins refer to coins that are offered to a select group of investors before they are made public. It is like getting an early access pass in a new cryptocurrency before it hits the market for everyone else.
There are several ways to find presale opportunities, including social media, cryptocurrency forums, dedicated presale platforms, or timely resources and lists.
During this phase, the investors would receive these coins at a discounted price, which is essentially the incentive you would get to take part and contribute capital, through buying the coins, to the project’s development. Now, not everyone will be able to invest as there are certain requirements that you would need to meet, such as investing above a minimum amount or meeting certain accreditation conditions.
This capital will then be used to further the project development for operations and marketing or any other expenses the project may require. Essentially, it is like investing in a startup business.
If you are considering investing in presale coins like those on a list by Techopedia, it would be wise to do your own thorough research and due diligence on the projects before investing, as it does carry a risk of not knowing what the outcome of the coin will be.
Pros of Investing in Pre-Sale Coins
The following are some of the advantages of investing in pre-sale coins.
Early Access to Promising Projects
One main advantage of taking part in presale cryptocurrency coin offerings is getting early access to promising projects. By investing during the presale phase, you, as an investor, can secure coins at the earliest stage of a project’s development, often before they are available to the public.
This early access will give you the opportunity to get involved in projects with high growth potential right from the start.
Potential for Discounts and Preferential Pricing
Presale cryptocurrency coin offerings typically offer coins at a discounted price compared to what they might be sold for during later stages or in public sale. These discounts serve as incentives for early investors to commit capital to the project.
Additionally, some presales may offer special pricing structures or bonus coins to early participants, further enhancing the investment potential.
Supporting Innovation and Project Growth
Investing in presale cryptocurrency coins allows you to play a role in supporting innovative projects and their growth. When you offer money to these new projects early on, you’re helping them grow and succeed.
This support is super important for projects with big ideas or cool new tech because it helps them move forward and achieve their goals.
Exclusive Bonuses and Incentives
In addition to discounted pricing, presale cryptocurrency coin offerings often come with exclusive bonuses and incentives for early investors. These may include bonus coins, access to exclusive features or services within the project’s ecosystem, or participation in special events.
These extras add value to the investment and further incentivize participation in presale offerings.
Potential for Higher Liquidity and Trading Opportunities
Presale cryptocurrency coins may gain liquidity sooner than coins acquired later through public sales or exchanges. This early liquidity can provide investors with trading opportunities and the ability to sell coins at a profit relatively quickly.
Cons of Investing in Pre-Sale Coins
The following are some reasons not to invest in pre-sale coins and why it might not be the right stage to put your money into crypto.
Volatility
Cryptocurrency markets are incredibly unpredictable, with prices changing rapidly. This unpredictability can cause big swings in prices, potentially resulting in substantial losses for investors.
If you are willing to take on higher risk for the potential of higher returns and are prepared to thoroughly research and understand the project, pre-sale coins might be the option for you.
High Risk
Pre-sale coins come with a lot of risk because the cryptocurrency market is speculative. Many projects don’t fulfill their promises, and investors could end up losing their investment.
Technical Risks
Blockchain and cryptocurrency projects are usually built on sophisticated technology. There’s a chance that technical problems or weaknesses could lead to security breaches or other issues that harm the project and its tokens.
What Are Established Cryptocurrency Coins?
Established coins like Bitcoin and Ethereum are like seasoned veterans in the world of cryptocurrencies. They have been around for quite some time and have proven themselves through testing and use by people in the cryptocurrency community.
Established coins, because of their history, are seen as safer bets, and because they are easy to find on several different exchanges, they are simple to buy and sell.
Pros of Investing in Established Coins
The following are some reasons why it is best to invest in already-established crypto coins.
Lower Risk
Due to their maturity and widespread acceptance, established coins are generally considered lower risk compared to newer or presale coins. They have already demonstrated resilience to market fluctuations and have established communities and support networks.
Diverse Use Cases
Many established coins offer diverse use cases beyond basic peer-to-peer transactions, including decentralized finance (DeFi), smart contracts, and non-fungible tokens (NFTs). This diversity can provide investors with exposure to various sectors and trends within the cryptocurrency ecosystem.
Liquidity
Established coins typically have higher liquidity, meaning there is a larger volume of trading activity. This liquidity allows investors to buy or sell their coins more easily without significantly affecting the market price.
Stability
Established coins have a proven track record of stability compared to newer or presale coins. Their longer history of existence and adoption by users and investors contribute to a more stable investment environment.
Potential for Growth
While established coins may not experience the same explosive growth as newer projects, they still have the potential for long-term appreciation. As the cryptocurrency market matures and adoption increases, established coins may continue to see steady growth in value over time.
Cons of Investing in Established Coins
The following are reasons why it might not be a good idea to invest in established crypto coins.
Market Saturation
Established coins may face challenges in achieving substantial price increases due to market saturation. These coins may already have a large market capitalization and user base, making it more difficult for them to experience significant growth compared to smaller, emerging cryptocurrencies.
Limited Innovation
Established coins may have limitations in terms of innovation and technological advancements. Newer projects often introduce innovative features and improvements, while established coins may struggle to keep up with evolving market demands and technological developments.
Conclusion
In a nutshell, both jumping into presale coins and sticking with the established ones have their upsides and downsides. Getting in on presales gets you early dibs on cool projects, discounts, and a chance to back innovation.
But if you prefer a smoother ride, established coins offer stability, less risk, and more variety in what you can do with them. Just keep in mind that presales can get a bit technical, and the older coins might not be as flashy with new features.
Essentially, the decision between investing in presale or established coins depends on you and what suits you best based on the research you have done. There ultimately may not be an actual right time to invest, but you may make a more informed decision based on the information provided above.
Article and permission to publish here provided as Contributed Content. Originally written for Supply Chain Game Changer and published on March 18, 2024.
Cover photo by Kanchanara on Unsplash.