Presales: A Guide for Crypto Investors

By Richard Adrian
13 Min Read
The cryptocurrency industry is constantly evolving with new blockchain projects. With these new projects, come fresh investment prospects. As such, investors ready to profit off the rising price action of new coins want to invest as early as they can.

Crypto presales are the most suitable periods for investors to support crypto projects.

A cryptocurrency presale is a method of fundraising for blockchain startups where investors can acquire tokens before their official listing. The process of conducting a presale takes place through a private sale. In essence, these private sales require investors to put in large amounts of funds. 

The risky prospects of investing in cryptocurrency presales make blockchain projects offer exclusive benefits to early investors. Such benefits include discounted prices, access to gated communities and staking rewards. Apart from the chance to purchase new tokens at discounted prices, presales allow investors to support promising blockchain startups. In return, these investors enjoy the prospect of future high returns. However, high returns are not a guarantee in case the project fails. For this reason, crypto participants usually approach presales with caution and sound risk management.

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We will help you master how to profit from new coins using our crypto presales expert guide. Continue reading to explore types of presales, conducting due diligence as well as the benefits and limitations of crypto presales. 

What is a Cryptocurrency Presale?

Blockchain projects use presales as a method of raising capital prior to their official launch. As such, these projects are able to secure funding and generate market hype prior to launch. Furthermore, hype during the presale stage can help attract more investors on launch day. Besides, there are investors who usually invest half their stake at the presale and the other half after the launch. 

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What is the Difference Between Presales and ICOs? 

Presales happen before the official launching of a project. On the other hand, the Initial Coin Offering or ICO takes place on the official launch of the project, usually via a centralized or decentralized exchange. 

It is worth discussing other ways of investing in new cryptocurrencies. This is because expert traders can gauge whether a cryptocurrency’s price will rise depending on the size of its presale investors. This is based on the assumption that projects that raised large amounts of funding during the presale can sell off on launch. 

One reason could be the project generated adequate marketing hype during the presale, and everyone interested in the project came in. Investors who make this assumption often believe timing is the best weapon when investing in presales. In essence, crypto tokens are usually risky business before launching. 

Cryptocurrency con artists are notorious for pulling the rug after successfully raising funds during the presale. As a result, investors lose millions of funds. For this reason, investors have to remain careful while investing in such projects and conduct in-depth research. 

‘Learn about the biggest cryptocurrency scams in the history of the blockchain on this DroomDroom blog post. ‘

Reason for Investing in Presales

Presales are the best way of acquiring digital assets at a discounted price. If successful, one could end up earning large profits after the success of their projects. For example, Peter made 800% profit from PEPE using his three-dimensional strategy for trading memecoin presales. According to Peter, the best presale returns are from projects with either a good utility, a strong community or both. However, the trader insists on the need for accurate timing when investing in presales.

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The main advantage of buying coins during their presale is the discounted price. This is because the presale price is often lower than the ICO price. 

Another reason for investing in presale is the chance to remain updated with the latest developments on the project’s roadmap. This could be the project’s plans before and after launch, as well as announcements of exclusive rewards. Additionally, the process of monitoring one’s presales portfolio ensures they stay at par with market fundamentals. 

Finally, early investors have the chance to support early blockchain projects and become part of their success stories. 

How to Find Legitimate Presales

There are several methods to discover new legitimate cryptocurrency projects. However, always conduct due diligence and background research before investing in any projects. This is because the crypto industry houses many scam artists looking to steal your money. For example, phishing attacks are popular in crypto; where a scam service impersonates an actual blockchain project to steal funds. In this section, discover channels for finding new blockchain projects.  

Relevant Communities

Join relevant communities and social media platforms. Twitter, Telegram and Reddit are suitable platforms and reliable sources to explore new projects. Use social media to follow cryptocurrency influencers and authority sources. In essence, these influencers often share valuable information and insights about new projects. Connecting and building networks in these communities can help you learn from expert investors. 

“Learn how cryptocurrency projects are leveraging the power of Decentralized Autonomous Organizations (DAOs) to expand their communities”

Cryptocurrency News Websites

Pay attention to reputable cryptocurrency news websites. These websites can be a valuable source of information about presale projects. In most cases, these websites offer feature articles, technical analysis and market fundamentals about new projects, upcoming ICOs, key industry partnerships and significant trends. 

Cryptocurrency Forums

Cryptocurrency forums can be an important source of information and valuable discussions. In such forums, one can find insights about upcoming projects. Satoshi Nakamoto first posted the Bitcoin whitepaper to a cryptography mailing list on Metzdowd. However, most early Bitcoiners claim they first discovered the whitepaper on the BitcoinTalk forum. Such forums allow one to interact with experienced investors, and like-minded people and even ask important questions. Often, these forums will have a dedicated section for discussions about presales and upcoming ICOs. 

Project Websites and Whitepapers

Investors can explore projects through their official websites, GitHub pages and whitepapers. Both of these are reliable sources of information about a project’s goals, roadmap and team profile. Whitepapers provide in-depth information about a crypto project’s tokenomics, technology and scope. On the other hand, the official project website details things like the roadmap and goals. Adequately reviewing both provides additional insights into the value of a presale project. 

How to Conduct Presale DD ( Due Diligence)

After identifying promising blockchain projects, ensure to conduct of proper research. In-depth due diligence and background research will help make an educated investment decision. The following are factors to consider when conducting due diligence for a presale. 

The Team 

An experienced team plays a significant role in the success of a cryptocurrency project. Research the team’s background and the profile of each founding member. Also, take a look at the project’s advisors. Team members with relevant expertise and experience demonstrate high chances of leading the project to success. 

The Technology

Evaluate the project’s technology and its unique solution to real-life problems. Understand the project’s technology in relation to its utility. The project’s potential for success and adoption relies on its technical vision. Study how the project plans to execute the vision and whether it brings value to the table.

Market Potential

Study the project’s market potential. Find out whether it has a viable product that will trigger market demand. Projects with a unique value proposition are more promising and likely to win market adoption. 

Community and Partnerships

Does the project have a vibrant and strong community? Projects with strong communities have the potential to succeed. As such, find projects with active, vibrant and supportive communities. Also, take note of the partnerships between the project and other companies. Partnerships with credible companies enhance the project’s legitimacy. Thereby making partnerships a reliable indicator of a project’s success. 

Tokenomics

Study the project’s utility and tokenomics. Learn how the project’s cryptocurrency or token will operate. Understanding how the token will derive market value will help determine its potential. Factors to take into consideration include token supply, token distribution, community, presale price and the overal ecosystem. A sound tokenomics model is a key indicator for the long-term success of any project.

Benefits of Presales to Investors

Prospect of Large profits

Presales enable investors to purchase a digital asset at an early discounted price. This price is often lower than the official launch price. Hence, allowing early investors to profit from the difference between the presale and listing price. Besides, the investor could choose to hold the asset for an extended period after launch. Thereby allowing them to benefit from the token’s future uptrends. 

Transparency

 Initial Coin Offerings are essentially transparent. This is because the team needs to constantly update the community about upcoming events. The majority of a project’s roadmap is communicated during the presale stage. 

Early-Stage Benefits

Early investors receive additional benefits during the presale stage. These rewards could be staking rewards, access to a gated community, merchandise, airdrops and discounted prices.

Risks Associated with Presales

Technical Risks

Teams market their new projects on the promise of groundbreaking technology. This means investors are more likely to invest in new tech and innovation. New technology comes with risks. These could be technical issues, security loopholes and untested blockchains. In essence, investors have to evaluate such risks to determine whether they are still winning to bet on the project.

Market Risks

The recycle bin of failed ICOs contains billions of lost investor funds. Despite the promise of presales, investors should remain cautious of rug pulls and weak projects. This calls for sound risk management practices and due diligence when buying initial offerings.

“Avoid the trap of presale scams by reading the  seven pro tips for avoiding cryptocurrency scams”

Regulatory Risks

Regulations around crypto presales and initial coin offerings are scanty. As a result, investors face the risk of fraud. Investors should observe caution and approach these industries with caution. However, governments and law enforcement have started taking notice of this and are working to build clear legislation. 

‘Read more about crypto regulations in this blog post that examines the U.S SEC’s approach to digital assets.’

Conclusion: How to Invest In Presales

From evaluating new projects to understanding presale risks,  this blog post has provided a comprehensive review of investing in crypto presales. The post has compared the benefits of supporting early projects against their risks. To this end, we hope you have learned how to discover upcoming ICOs and how to evaluate credible projects. Thank you so much for joining us in this guide — Till Next Time.

'I write about groundbreaking blockchain technology. I cover trends across crypto, DeFi, onchain data analytics, digital assets research and the movers/shakers in fintech. I’m active on Linkedin too. Join me and let’s transform groundbreaking tech into mindblowing art. 'Richard Adrian Munene
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