Top 6 Tips Prior to Investing in Initial Exchange Offerings

In the world of cryptocurrencies, tokens, and assets, there will always be some new trends worth keeping an eye on. As of right now, the focus has seemingly shifted to Initial Exchange Offerings, or IEOs. It is an interesting business model, although interested participants have to take a few precautions prior to becoming eligible for these offerings.

Register and Verify Your Exchange Account

As normal as it may seem, some people assume an Initial Exchange Offering will not necessarily require an exchange account to be properly verified. That is often far from the case, although there may be some exceptions along the way. Anyone who is interested in IEOs should ensure their exchange account is verified as quickly as possible, simply to avoid not being eligible for participation. Most of these exchanges also require verification to unlock higher trading volumes, after all.

Not all offerings are Legitimate

Even though the Initial Exchange Offering business model is designed to weed out potential scams, there is no such thing as a foolproof method. Especially not when considering how these tokens are often listed on the exchange in question fairly quickly. Investors may receive better protection due to the involvement of specific top exchanges, but that doesn’t mean every IEO is worth investing in either. The team behind every project still remains a risk factor, for rather obvious reasons.

Be Prepared to Sell Quickly if Needed

Most people invest in an IEO primarily because they want to make a quick buck. As such, those who buy tokens will often try to liquidate them at a higher price as soon as the token gets listed for trading. As such, investors need to prepare for quickly selling their tokens if this is their main objective. Those who are in it for the long-term may want to revise their strategy depending on the initial market conditions, as there is no guarantee these tokens will rise in value over time.

Don’t buy in for the Hype

As is usually the case with fundraising efforts among cryptocurrency projects, there is a lot of hype surrounding IEOs right now. Every project gets the same level of FOMO as the first Initial Coin Offerings did, even though 90% of those projects either failed or is about to fail pretty soon. How things will pan out for IEOs, remains to be determined at this point, as it is too early to draw any real conclusions. However, investors should still perform research on every project prior to investing.  

Buy Native Exchange Tokens to Participate

Perhaps one of the more interesting requirements is how IEO participants can only partake if they own enough native exchange tokens. For Binance, that means investors need BNB, whereas other exchanges who might jump on board will either have their own token or issue one in the future. This will undoubtedly influence the price of these individual tokens as well, although their value will undoubtedly tend to fluctuate significantly as well.

Be Quick to buy IEO Tokens

While all of the steps above are not difficult to follow, there is one key challenge ahead prior to participating in an IEO. These token sales can usually be completed within a minute or less, thus investors will need to be very quick on the button accordingly. This is also one of the bigger roadblocks associated with this particular business model, as a lot of interested investors will potentially not be able to buy the tokens accordingly.

---

Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency.

Image(s): Shutterstock.com

The post Top 6 Tips Prior to Investing in Initial Exchange Offerings appeared first on The Merkle Hash.

You may also like