Crypto Presales Vs Established Tokens: Which Is Better?

This is sponsored content.  Barchart is not endorsing the websites or products set forth below.

If there was one thing that the crypto industry offers investors, it is countless ways to put their money to work. At any point in time, there are thousands of cryptocurrency tokens in existence, meaning investors are always spoiled for choice. With this comes the decision of whether investors will put their money into established tokens or presale ones.

Different investors swear by different paths and insist that it is the superior one, but it is worth exploring whether this is true. In this article, we’ll look at crypto pre-sales and established tokens to determine which is a better option.

What is a Crypto Presale?

A crypto presale refers to the sale of a portion of a token supply before it hits the market. We are all used to buying crypto from exchanges and other such platforms. But before such a token hits the market, it might go through a presale. The organizers sell a portion of the token supply for a lower price than it will be listed on, and this is a way to drum up both financial support and market hype for the project.

Lots of presales have raised tens of millions of dollars, and they continue to be popular within the crypto industry.

Pros of a Crypto Presale 

Some of the reasons that presales have become popular are as follows:

• Cheaper Tokens:  As we've said, presale tokens are listed at a lower price than their exchange rate, and if the token goes on to do well, the presale price might be the lowest it will ever be. So, for investors, this is a way to get the tokens they want at a lower price.
• The Chance for Profit: The purpose of engaging with a crypto presale is to potentially resell the tokens at a higher price in the future. If you're able to get your hands on tokens for a lower price, and they go on to perform well in the market, you can resell them and make even more money. This is why, as Dalmas Ngetich writes, many invest in presales looking for the next 100x crypto.
• Non-monetary Perks: In a bid to draw in presale investors, organizers often give them perks that are not necessarily monetary. These include free merchandise, access to Q&As, exclusive communities, and so on.
• Encouraging Innovation: While many presale investors are legitimately trying to make a profit, some simply believe in the token in question and hope that the project will succeed. As such, presales are a way to make sure that innovative projects can enter the market, and for some, this is worthwhile. 

Cons of Crypto Presale

As much as crypto presales come with a ton of possible benefits, there are also a few downsides you should remain aware of.

• Potential for Loss: In the same way not every business venture will succeed, not every pre-sale will be worthwhile. It is possible to invest in a presale, and the token you buy goes on to underperform the market. As such, you are always advised to invest only money you are willing to lose.
• Rug Pulls and Scams: The crypto industry, unfortunately, has to deal with the prevalence of scams and rug pulls, and these are especially relevant to presale investors. In the worst case scenario, you might invest in a crypto project only to not receive any tokens at all or have the project shortly abandoned by the organizers. This is why you are advised to do your due diligence before investing in a crypto pre-sale to avoid getting scammed.

Established Tokens 

While presales represent tokens that are not yet on the market, there is a class of established tokens within the industry that have existed for years at this point. Obviously, the earliest is Bitcoin, which has been on the market since the late 2000s. You also have tokens like Dogecoin, Ether, and Solana. Many investors are wary of pre-sales and would rather invest in these tokens. For this, there are a few pros:

• Freedom From Scams: When you invest in a new presale, you run the risk of being scammed. No matter how promising a token is at a presale level, it has not entered the market, so there is no guarantee that it is legitimate. But when you put money in Bitcoin or Ether, you are essentially guaranteed to be buying a legitimate project.
• Market Longevity: As with any other asset class, a cryptocurrency needs time to prove itself to investors. Ethereum as a network, for example, has proven to be a legitimate foundation for all sorts of projects like DeFi, NFTs, and so on. Putting money into an established token means that you know its use case is legitimate and will stand the test of time.
• Market Performance: As much as there are thousands of cryptocurrencies in the industry, many of them go on to fail. Even if there is a lot of hype for them initially, some simply don't maintain this hype and the price declines. This is especially true when the market overall goes through a harsh period of winter. Tokens like Bitcoin have survived several winters at this point, and anyone buying them can rest assured that they will recover, even if it takes time. This, however, is a benefit that presales simply do not offer because they are so new. 

Which is Better?

Now that we have an understanding of both presales and established tokens, the question remains of which is better to choose. The reality is that the better choice for investors depends on their specific needs.

First, you need to consider risk tolerance. The crypto industry is notoriously volatile, but this is doubly so when investing in new tokens that haven't proven themselves. Investing in Bitcoin, while risky, is nowhere as risky as putting money into a new presale. If you are an investor who is willing to take risks, a presale might be a good idea for you. But if you are more risk-averse or have a lower budget to work with, then an established token might be a better option. 

Another thing to consider is the use cases and potential of the projects in question. Sure, Ethereum has proven to be a genuine and valuable project over the years, but a new presale might come along that can beat it in terms of speed or scale. In that case, the presale might even be a better option for you than the established token.

As an investor, you're always advised to diversify your portfolio, and this could mean having a mix of both presale tokens and established ones to hedge your bets. This is if your budget will allow for it, and, of course, the money being invested in either category is money you can afford to lose.

Conclusion

As a crypto investor, you will always be spoiled for choice, and this includes the choice of new tokens or more established ones. As we've pointed out in this article, there are benefits to either choice and ultimately, the best option depends on your unique circumstance and desires. In all of these, always make sure to exercise caution and do your research before putting your money in any of them. 

This article contains sponsored content. Barchart has not reviewed, approved, or endorsed the content, and may receive compensation for placement of the content on this site. For more information please view the Barchart Disclosure Policy here.