Striking gold as an angel investor sounds like a dream! Capitalize on a listing in the short term or see the innovative crypto project grow to impressive heights in the long term. But how do you become one? How to buy new crypto before listing? The ChangeHero team is going to give you an introduction to this method of crypto investing.
- The most obvious benefit to investing in new crypto projects early is the possibility of bigger returns later down the line. However, it has some additional perks like early access to new infrastructure or discounts and policy preferences.
- Investing in new cryptocurrencies comes with considerable risks: from falling for a scam to the project failing in the long run. It can be helped to a degree: review the project’s technology and design outlines in a whitepaper, look into the the team, the roadmap, and the community.
- You can find places to get into new crypto projects and invest early on social media platforms, cryptocurrency trackers, and exchange launchpads.
What is the Benefit of Getting into New Crypto Projects Early?
Being an early investor comes with many clear benefits in TradFi and crypto alike. If you get in early and strike gold, you will get a chance to multiply the initial investment. Sounds great, doesn’t it? Of course, there are huge risks to counterbalance this reward, which we will get into a bit later.
There are a lot of reasons why risk-taking crypto investors seek out promising projects before the official launch:
- Crypto projects also sometimes give more benefits to early backers, such as “early bird” discounts. It is understandable, considering how crucial this monetary support can be for a successful launch.
- Early access to upcoming crypto projects is especially attractive to tech-savvy investors. With it, they can leverage the first-mover advantage and build a project themselves to multiply the investment.
- Utility tokens often come with benefits like voting rights or staking rewards. Getting a say in the project’s development early on or collecting a bigger stake can make a big difference.
- And, of course, if a project turns out to be successful, the initial investment can increase significantly, especially a few years in.
Becoming an early investor seems very enticing: in presales, new coins are generally sold for cheaper than they trade publicly afterward. The key word here is “generally”: for every project that turned out to be successful, there is at least another that left early investors holding the bag.
Launching a new crypto project is not easy but not as hard as keeping it going. Before we get into the essentials of a legitimate project, let’s review the risks that come together with early token sales.
Is Buying New Crypto Coins Risky?
High rewards usually come with high risks in investing, and early investing is no different. At the initial stage of development, it is hard to tell if the project can be successful, and this is not even taking into account the unforeseen circumstances.
- Troubled launch. For example, Tezos’ initial coin offering was in 2017 but the backers got their coins only in 2018 after some delays and a lot of uncertainty. Tezos has shipped a product but a lot of fundraising events do not even do that.
- Regulatory issues. Initial coin offerings can be considered investment contracts, which would put a crypto token into the security territory. Depending on the jurisdiction, the authorities might go after the fundraisers if they do not register.
- Low liquidity. Listings are considered bullish events for their positive effect on an asset’s liquidity and volume but before one, it can be nearly impossible to trade the new crypto.
- Scam and fraud, the most glaring risk of investing early in anything. Crypto is infamous for facilitating fraudulent fundraisers and launching coins that are dead on arrival at best and never see the light of day at worst. Because it is such a big risk, we have made a list of things to look at to help you understand if you are reviewing a legitimate project.
Crypto Pre-Launch Checklist to Evaluate a New Crypto Project
Before you think about how to buy new crypto before listing, you will be advised to do your own research and perform due diligence. But what exactly do they usually mean by that? There is no single recipe but generally, some of these things will point that you are looking at a viable project.
- Whitepaper or a technical document outlining the design principles of the project. If there is none, chances are that the project will not last and at best produce a pump and dump. Not any whitepaper will do, though: if it reads like a sales pitch, this project does not offer anything besides that.
- A whitepaper usually contains a description of the project’s use case. Even if you do not yet have the technical knowledge to understand how feasible it is, try relying on common sense at first.
- A roadmap, like a white paper, is not an immediate guarantee of trustworthiness. However, it should be enough to gauge the team’s commitment and competence.
- Review the tokenomics, or token economics thoroughly. How much of the supply is left to the team? Is it immediately available to them to dump or locked up to ensure long-term commitment? How many tokens are there going to be at launch and in total? All these things should also be verifiable on the blockchain or in the token contract code.
- Try finding something about the founding team. An anonymous team is not a rarity these days but it makes it easier for scammers to evade accountability. Likewise, a doxxed team is not an ironclad guarantee that the project is legitimate.
- Checking out the project’s community can also be helpful. A first glance can be deceptive: watch out for paid shills or bots artificially inflating the social volume of an upcoming project. Stay a while and see if the founders communicate with the community members, whether the questions get answered, and if fair skepticism is tolerated and addressed.
Where to Look for New Crypto Before Listing?
If you are curious to learn how to buy new crypto before listing, we can’t provide you with a surefire method but can give a few pointers. Remember to do thorough research before investing and be prepared to lose it entirely.
Social media platforms
Social media is often the first place where you learn about upcoming releases and new crypto projects, sometimes even before listing. However, you should know what exactly to look for and what to avoid.
The most common and popular social media channels for crypto enthusiasts are X (previously Twitter), Discord, Reddit, YouTube, and Telegram groups and channels. In addition to announcements, you can find communities and newsletters to follow to learn about other future projects.
Launch campaigns and official announcements (which you should always cross-reference) are not the only valuable hints you can get there. Keep an eye on new projects that do not launch tokens right away: sometimes, like Uniswap or Arbitrum, they retroactively reward early contributors. Airdrops are also a common way to launch new tokens but be extra cautious about them. Scammers are aware that airdrop hunting is a popular activity, and will often hold fake giveaways and airdrops.
Another resource to stay informed about new crypto presales is crypto-focused tracking sites. Some of them offer a wide range of information (CoinMarketCap, CoinGecko) and others are more focused on presales and upcoming launches (ICO Holders, Top ICO List, ICO Bench).
Coin trackers are usually updated later than the social media pages after the initial announcement. Listing on these services can come as the next step before launch, so if you want to get into new cryptocurrencies as early as possible, this stage might be later than you’d like.
Tracking these platforms is worth it, though: they collect as much information and present a lot of things you need to know in an easily accessible way. You can find whitepapers and team and project information on the fundraiser page. Of course, your homework should not end on that page but having a picture of a new cryptocurrency can certainly help you make a decision.
Finally, the pre-launch step that usually most closely precedes a launch and listing is an initial exchange (IEO) or DEX offering (IDO). Initial coin offerings (ICO) are also still around! Like with coin trackers, launchpad platforms usually provide plenty of information in one place and even perform due diligence before accepting new crypto before listing.
Initial exchange offerings (IEO), as the name implies, happen on centralized crypto exchanges. Usually, after an IEO concludes, new crypto coins get listed on the same exchange. Fundraising for new crypto projects this way is convenient since the team can get the coin listed almost immediately and they find a wide audience of early investors from the exchange users.
Initial DEX offerings (IDO) work by the same principle but in a slightly different way: investors receive the purchased tokens through the smart contract. An IDO pool collects liquidity for a determined time and then unlocks the new crypto coins, so when the time for free trading comes, the market pairs come with sufficient liquidity.
Launchpools, organized by centralized crypto exchanges and decentralized exchanges, deserve a mention. These are campaigns that reward staking an asset in a liquidity pool with new crypto coins. In a sense, they combine the benefits of airdrops and IDOs.
We hope that you were able to draft a plan on how to buy new crypto before listing after reading our guide. We wish you the best of luck in finding your 2024 gem early.
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Frequently Asked Questions
How do I get new crypto before listing?
To get new cryptocurrencies before they are listed on an exchange, you can take part in Initial Coin Offerings (ICO), Initial Exchange Offerings (IEO), and Initial DEX Offerings (IDO). They are generally found on different platforms: presale trackers/calendars, centralized, and decentralized exchanges, respectively.
How do I find new promising crypto projects?
The usual places to find out about new crypto projects are social media, dedicated crypto media, newsletters, and platforms that organize presales.
Are crypto presales worth it?
Research suggests that the degree of ICO success depends a lot on the bull or bear phase of the crypto market. Moreover, there is a high discrepancy between the mean and median of ICO returns, suggesting that the majority of presales perform underwhelmingly but the few ones that perform well show impressive results. We recommend you make the decisions about participating in a crypto presale with this information in mind.