What is a Cryptocurrency Presale?
A cryptocurrency presale, also known as a pre-ICO, is an event where a development team sells a certain number of tokens to a few selected investors before the ICO is made available to the general public. Like an ICO, the purpose of a presale is to raise an initial set of funds to help develop the project.
The fundraising targets for presales are typically lower than the main ICO, and the price per token is generally cheaper. These characteristics usually help attract early investors since significant profits can be made once the project launches.
A Deeper Look at Cryptocurrency Presales
Presales are beneficial to both the development team and investors. On the one hand, the developers receive the funds they need to keep pushing the project forward, while presale investors benefit from cheap tokens that may rise in price in the future.
However, it is worth noting that presales may also come with risks. Firstly, some presales may be scams. It is not uncommon for scam developers to create fake projects just to collect money from a presale. Also, even if the project is legitimate, the project is not guaranteed to succeed. In this case, a failed project may leave presale investors with a bag of useless tokens.
From a developer’s point of view, presales may lead to heavy dumping after project launch as early investors cash out as soon as the price begins to rise. This mass offloading can lead to massive red candles, which may scare off potential new investors.
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