What Is Token Pre-Market: Why Do You Need It And How to Buy It?
Pre-market tokens are gaining momentum. What is it, what risks exist, and how to buy?
What is pre-market?
The term “pre-market” is widely used in traditional finance. The name implies that it is trading activity prior to the official trading hours of the market. That is, pre-market occurs before the major stock exchanges open. This is an ideal time to make an assessment about potential asset price movements throughout the day.
In the world of cryptocurrencies, the term “pre-market” has a different meaning because cryptocurrency markets operate around the clock. Pre-market is the stage of token sales on some cryptocurrency marketplaces before their official launch. Here, traders also use the ability to predict the potential price movement of tokens.
Trading is done not with tokens, but with points, which will then be converted into real tokens after their release. Sellers and users themselves set the desired price for the future token and speculate on it. However, it is important to emphasize here that the set price at the pre-market may be significantly different from what it will be at the official launch of the token.
Why would a project launch a pre-market token?
Pre-marketing a token provides opportunities for both the project itself and its users. The pre-market allows the project to raise the initial capital needed for its development. They use these funds for product development, marketing, legal support, and other purposes.
In addition, the pre-market stage provides an opportunity to build a community. Early supporters and investors can significantly support a project at the initial stage, especially if its developers are new to the business and have no other way to attract community and capital to realize their ideas. And early token sales can provide initial liquidity at the start of trading, which helps avoid wild price swings and provides stability. There are risks here, but more on that later.
Another non-obvious possibility is the interest check that the project conducts. The pre-market stage helps the project creators assess the level of interest in the token. Developers use this indicator to evaluate the future success of their project.
Opportunities for the user
Basically, crypto enthusiasts use the pre-market as a great opportunity to capitalize on price growth. During the pre-market stage, tokens are often sold at a much lower price than on the open market after listing. If the project is successful, the price of the tokens can rise significantly, allowing early investors to profit. And some projects may even offer bonuses and discounts for buying tokens during the pre-market stage.
The spirit of early participation is also an attractive pre-market feature. Early investors often get access to private communities, inside information about the project, and opportunities to interact with the development team.
Hence, the exclusive privileges, features, and products that users can get during the pre-marketing phase. These may include early access to products, discounts on services, a voice in project decision-making, etc. In some projects, tokens provide a voice in project management or key decision-making.
It should not be forgotten that for some investors, participation in pre-market is only part of their strategy to diversify their portfolio. The diversity of assets allows them to reduce risks. Others buy tokens at the pre-market with the expectation of long-term growth, believing that the value of tokens will increase significantly over time.
How to buy a pre-market token?
Disclaimer: We are not encouraging you to trade assets, our article is for informational purposes only. All decisions are left to you. Remember the importance of doing your own research and.
Buying a token on the pre-market stage starts with a thorough analysis of the project and platform selection. It is important to study the technical document of the project and the development team, and make sure that the project has prospects.
Next, you need to choose the platform that is doing the pre-market of your chosen token. If it suits your needs, you can proceed with the purchase. But before that, be sure to go through registration and KYC.
The principle is not much different between platforms, so we will show you how to buy a pre-market token using Bybit as an example.
1. Go to https://www.bybit.com/en/trade/spot/pre-market and select the token you want by clicking on the “Trade” button.
Source and Copyright © Bybit
2. Then click “Create order”, enter the amount and the desired number of coins you want to buy.
Source and Copyright © Bybit
3. Or you can scroll below and select your preferred seller. And then click on “Buy.”
Source and Copyright © Bybit
4. Next, follow the simple instructions and proceed with the transaction.
You will receive a certain amount of points to your account, which will be automatically converted when the tokens officially hit the market.
Risks of pre-market
The cryptocurrency pre-market industry is just starting to develop, and besides the benefits, there are also risks that users need to pay attention to.
Pre-market is a trading on promises, and a project may fail to achieve its goals for various reasons. Lack of funding or promotion, or maybe the unexpected scandals or a bear market. This will cause the price of the token to fall, if not completely devalue it.
It should also be kept in mind that wherever there is a new opportunity to make money, there will be scammers. After fundraising, the team may disappear, leaving pre-market participants without funds. And some projects may intentionally mislead their community about their real goals and opportunities.
Risk assessment can be complicated by the fact that at the pre-marketing stage, investors have limited access to information about the project, its team and the real situation. But even projects with a good team and a strong concept can face unexpected challenges, so success is not guaranteed.
Volatility spares no one, so immediately after listing tokens can fluctuate greatly in price and the main advantage of pre-market, which is profitable trading, can turn into a disadvantage.
