In the dynamic world of digital currencies, the pre-release market has emerged as a leading and innovative method. The pre-launch market provides a series of exclusive opportunities for traders to invest in a token before it is listed and officially launched. By providing easy access, this market allows buyers and sellers to talk about a coin before its official release and buy and sell at certain predetermined prices.
The pre-market uses OTC or Over-the-counter services. This means that the structure of buying and selling in this market is done outside the usual routine of normal exchanges, and the determination of the price (without restrictions) is the responsibility of the transaction parties. The growing popularity of this market along with the support in platforms such as KuCoin and many other decentralized exchanges (DEX) has been able to partially change the pattern of launching and offering various tokens and investing in the cryptocurrency market. To learn more about the pre-launch market of digital currencies, how this innovative and emerging market works, as well as knowing its advantages and disadvantages, stay with us in the rest of this article.
What is the Digital Currency Pre-Release Market?
First of all, we must mention that the pre-sale market (pre-market) also exists in the stock market and constitutes a large part of the stock market. In the same way, this market also appeared in the digital currency market, which is considered newer than the pre-stock market. Although both the pre-IPO market and the pre-IPO market of digital currencies carry a common name, these two markets are completely different from each other and have different mechanisms. The first and most fundamental difference between the two markets is that the market is 24 hours before the digital currency is released. Unlike traditional markets, the digital currency market has no time limit for buying and selling and allows traders to make continuous transactions at any time.
The Pre-IPO Market functions as an OTC platform and is specifically designed for early trading of new tokens that have yet to be officially listed and offered. The mechanism of this market is such that sellers are required to put a security deposit to guarantee their commitment to the transaction. At the same time, buyers must also deposit their capital that they intend to buy before making the transaction. This is a confirmation of the buyer’s intention to purchase the tokens at the agreed price when the token is listed. These measures are critical to ensure that the parties to the transaction are bound to fulfill their obligations immediately after the token listing operation. If either party fails to fulfill its obligations, its security deposit will be forfeited to be used to compensate the loss caused to the other party.
Types of Market before offering Digital Currencies
Currently, there are two common types of premarket buying and selling of digital currencies. Centralized and decentralized.
Centralized Premarket Trading (CEX)
in which buyers and sellers agree to conduct their transactions related to tokens on centralized exchanges prior to the official launch and offering.
Decentralized Pre-IPO Market Trading (DEX)
where a decentralized platform uses smart contracts to automatically manage transactions. This technology ensures that transactions are carried out according to predetermined conditions without the need for any intermediaries.
Advantages of the digital currency pre-launch market
The digital currency pre-release market has advantages that can encourage traders to be active in this market.
Determination (discovery) of the initial price
Perimarket can significantly help to discover the initial and early price of a token. This market allows investors to evaluate the possible impact of several external factors on the market before making transactions officially. This issue allows market participants to have better analyzes of the situation and more easily interpret existing price fluctuations. It also increases the possibility of predicting the trend and can indicate how a digital currency will behave after its official launch.
Assist in project development
A cryptocurrency pre-market offers an opportunity for the project’s development team to raise funds prior to the IPO of a token. Usually, these funds are used for the further development of the project, which can ultimately affect the discovery of the initial price.
Ability to adapt strategy
The pre-release market makes it possible for investors to easily change their investment strategies and adapt to new conditions by using the valuable opportunities that this market provides. This issue can make the actors of a financial market be able to react faster and easier than the usual routine to influential events and new conditions and change their predetermined strategy if necessary. By constantly improving investment methods and models through the pre-offer market and before the official offer, investors can avoid possible risks caused by market fluctuations and at least minimize these risks.
Easy access
The digital currency pre-launch market often provides a fair playing field for digital currency players to take advantage of opportunities before the official launch of a currency or token and discover its price. It is very easy to access and carry out transactions in the digital currency premarket, and investors can easily do their transactions if they are interested in trading in this market.
Market risks before offering digital currency
Although the digital currency pre-market offers attractive and convenient opportunities for investors and also helps discover the price of tokens before their launch, it should also be noted that this market is not without risks. In the following, we will examine the possible risks in the market before the release of digital currencies.
Limited liquidity
In the pre-IPO market, liquidity is often much lower than when the token is officially listed for trading. This issue can lead to challenges in executing transactions and buying and selling at preferential prices, which may further increase the price. The absence of market makers in this market, who usually ensure order-based buying and selling in standard markets and perform market-making operations with their orders, means that even for cryptocurrencies with high liquidity, fewer transactions are made.
Challenges in executing transactions
Placing orders in the market before offering digital currencies does not necessarily mean that the order and transaction will take place. Few traders want to trade at your bid price, and this can lead to traders not filling their orders. If you want to buy and sell in any way regardless of the set price, you may experience a significant price deviation from the price you intended. This issue can completely change your financial and trading strategy.
Market instability and volatility
One of the characteristics of the premarket of digital currencies is the increase in price instability after listing in centralized and decentralized exchanges, which can lead to extreme price volatility and, as a result, extreme price fluctuations. This volatility can make it difficult for traders who have set a price target to buy and lead to a possible loss of capital. Although the Pre-IPO allows people to access the cryptocurrency before the official Token Sale, this market does not guarantee that the Pre-IPO price will be more attractive to traders than the IPO price. . Traders should conduct their own research before any action in the market before offering digital currencies and do sufficient and appropriate studies on things such as Tokennomics (token economy) of the project in question, the creators and people involved in the project and discovering the price of the token in question. .
What is the role of digital currency community in Premarket?
The digital currency community is a powerful and dynamic community. The emotions and emotional decisions of activists and members of this community can have a significant impact on the success or failure of a project in the market before the digital currency is released. By connecting with each other through various forums and social networking platforms, members of the crypto community can provide each other with valuable insight into a token’s potential for potential success prior to its official launch. The sentiments of digital currency market participants and the discussions that take place on the digital currency pre-market can be a determining factor for discovering the price and development and success of a project in the near future and after its official launch. Therefore, the crypto community can be an influential factor in the premarket and should not be ignored.
Which Digital Currency Exchanges have Pre-Market?
Reputable digital currency exchanges such as Binance, KuCoin, ByBit, Gate.io and BitGet have digital currency pre-launch markets where users can Trade from the official offering of a token.
For example, KoCoin exchange is one of the exchanges that has a very good premarket. Users can do their transactions through this exchange and using the OTC platform before the listing and official launch of a token. Traders can trade directly with each other and submit their bids. After the start of the pre-market function of digital currency in KoCoin exchange, eight successful projects have been launched in the market before the launch of this exchange; Projects like ETHFi, Manta, TIA and other good projects that were able to achieve success.
The key features of the exchanges that support the cryptocurrency pre-market are:
- Pricing by users
- Bail guarantee
- Transaction timing
- Management of delays and cancellations of transactions
- 5 ways to receive fees
Finally, as a concrete example of price discovery in the cryptocurrency premarket, in recent days we have seen the start of the Hamster Kombat token premarket. In recent days, various exchanges have launched and priced this token in the pre-sale market one after another. This issue shows the importance of the pre-release market in the world of digital currencies, and you can see how the market participants react to the launch and listing of this token in terms of price.
Conclusion
The pre-release market provides the opportunity for digital currency market participants to trade a currency or token before its official release. Although there are many opportunities to make a profit in the digital currency premarket, people should study the project they want before taking any action. In addition, before deciding to enter the pre-release market, it is very important to know how it works and the advantages and disadvantages of this market. The Pre-IPO market, which includes both centralized and decentralized exchanges, creates a dynamic and creative landscape for investors looking for early opportunities to profit from new tokens.
Premarket can bring significant profits to traders, especially if their desired token is well-received after the official launch. But investors should also be aware of possible risks and consider them. Market sentiments and excessive speculation can create false pressures, and it is necessary for traders to do the necessary research and investigation before entering the market before offering and starting trades.
If you are planning to enter the cryptocurrency premarket, you can increase your chances of profiting from this emerging market by managing risk efficiently and following a proper strategy. Another point that is very important is that investors should only consider amounts for investment that will not cause serious financial damage to them if their desired project is unsuccessful and the capital is lost. In this way and by observing the aforementioned precautions, it is possible to make a good profit by taking advantage of the opportunities created by the market before the release of digital currencies, which are becoming more and more known.
Frequently asked questions(FAQ)
What digital currencies have a premarket?
Different digital currencies can enter the premarket according to the opinion of the development team and exchanges before the official listing and release. Hamster Kombat is the last example of currency or tokens that entered the market before the launch of digital currencies.
Which digital currency exchanges have premarket?
Digital currency exchanges such as Binance, KoCoin, BuyBit, BitGate and GateIO are among the exchanges that have a premarket.
Is real digital currency bought and sold in Perimarket?
In the pre-release market of digital currencies, transactions take place before the launch and official release of a currency or token. Therefore, instead of instant buying and selling of real assets, some kind of agreement is recorded between the parties of the contract.
Is the digital currency market associated with risk?
Yes, like any other market, the premarket also comes with risks.
