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What is a Crypto Presale and How Do They Work?
A cryptocurrency presale is a pre-listing event that is held to raise funds for a new cryptocurrency project. During a presale, investors can buy new cryptos for a low price before they are listed on exchanges. In this guide, I will delve into what a crypto presale is, how they work and how to invest in 2024.
Crypto Presale Guide Overview
A crypto presale is a good way for investors to get into a project early. It’s also possible to buy crypto tokens at a discounted rate, which is ideal for investors that see long-term potential in a project.
With that in mind, here’s our rundown of the most important factors to keep in mind when navigating the world of token presales.
- A cryptocurrency presale usually takes place after a private sale and before a public sale.
- Presales are held to raise funds for a new project before coins are listed on exchanges.
- Crypto presales are usually held through the project’s official website and require a crypto wallet to participate.
- To invest in a crypto presale, create and fund a wallet, connect your wallet to the presale, and buy tokens once the presale is live.
- Stay safe when buying presale crypto by avoiding scams, never sharing your private key and using a secure browser.
What is a Crypto Presale?
Before considering how to buy crypto from a presale, it’s important to understand exactly what a crypto presale is.
A crypto presale is an event that allows investors to acquire cryptocurrency coins or tokens before they’ve been released to the general public.
Often, but not always, cryptocurrency tokens are offered at a discount during a presale, which is why many investors are interested in them. These presales are especially useful if you believe in the long-term potential of the project.
Typically during a presale, tokens are sold to you directly by the team behind the project.
The presale usually takes place before an Initial Coin Offering (ICO), which is when a company looks to raise capital by making their cryptocurrency available to the general public.
A cryptocurrency presale will often happen as part of a fundraising cycle that uses the following structure:
- Seed Funding – Funding from founders or angel investors enables the project to get started.
- Private Sale – Cryptocurrency tokens are offered to select investors or venture capitalists at a discounted rate. The private sale aims to secure significant capital to aid with the project’s development.
- Crypto Presale – Tokens are offered to early supporters at a discounted rate (usually at less of a discount than during the private sale). This stage helps to raise funding and drum up support for the project.
- Public Sale – Usually conducted as an Initial Coin Offering or an Initial Exchange Offering (IEO), this stage allows the general public to purchase tokens.
- Listing – After the various funding rounds, the token is listed on cryptocurrency exchanges, making them available on the open market.
How Do Crypto Presales Work?
Cryptocurrency presales follow a relatively simple process that makes them attractive to investors.
Before the presale starts, the project team releases a whitepaper, which outlines the project’s goals, technology, and tokenomics. The whitepaper provides potential investors with crucial information about the project’s vision and the token’s intended use.
During this stage, the project will roll out its marketing campaign and encourage early presale signups to generate buzz around the event.
Most token presales have a specific launch date. On this date, the project will unlock the presale dashboard, through which you can buy presale tokens with blockchain tokens. Investors who signed up for early access may be able to access the presale before others.
During the presale, the project will allocate a specific amount of tokens at a discounted price compared to what they will be during the public sale. The presale price is often lower to incentivize early investment and compensate for the higher risk associated with investing in a new project.
Investors typically participate by sending cryptocurrency (like Ethereum or Bitcoin) to a designated address provided by the project. The process often involves registering on the project’s platform and following specific instructions to complete the investment.
Investors will be able to claim the presale tokens with the wallet that they used to participate once the presale is over.
When the event ends, investors can claim their tokens by following the instructions on the official project website. Some presales implement vesting periods. This is a period of time when tokens cannot be sold or swapped, to prevent sell-offs.
After the presale, tokens are launched on exchanges for a higher price than they were available for during the presale. At this point, early investors will be able to sell or swap their tokens for profits.
In most cases, presale projects will continue to incentivize project participation by providing rewards for long-term investment. This might include staking, revenue shares, NFTs or access to exclusive DeFi products.
The money that is raised through a presale is usually used for project development and securing top-tier exchange listings.
Crypto presales are a high-risk investment. There is no way of knowing whether funds that are raised will be used for future development and investors should be wary of projects that lack a clear roadmap or plan.
How to Buy Presale Crypto in 2024
Now that you understand how cryptocurrency presales work, let’s take a look at how to buy crypto from a presale.
To buy crypto from a presale, follow the process outlined below.
Step 1: Check the legitimacy of the presale
The first (and most important) step of the process is to understand whether or not a presale is legit.
Doing this at the very beginning will help you to avoid scams in the long run.
Check the code on Etherscan
Etherscan is a block explorer for the Ethereum blockchain. You can use Etherscan to check information relating to the crypto presale, including transactions and transaction history, information relating to addresses, blocks and tokens, and more.
If the token you’re looking to buy is an Ethereum-based, ERC20 token, you can look up the wallet address to see how much ETH (and other tokens) it holds. It’s also possible to see this wallet’s past activity.
To do this, put the project’s wallet address into the search bar on the homepage. The “Overview” section will give you key information relating to the wallet, while the “Transaction” section underneath will tell you about historic activity.
Look at the size of the community and social media pages
Take a look at the project’s social media pages and Discord server. There’s no guarantee that a project with a large, active community is legit, but it’s usually a good indication.
See how much interaction the project owners have with their community. Are they posting regular updates on their social media platforms? Are there any experienced traders posting about the project?
Has the presale been mentioned by reputable news outlets?
Have any reputable news sites posted about the presale? Depending on the size of the project, it’s unlikely that any mainstream news outlets will be reporting on the crypto presale, but it’s possible that a crypto-centric site will have picked up the story and posted about it.
Be aware that lots of new cryptocurrency projects will pay small news outlets to be featured on their website, so just because a site is posting about it does not mean that they necessarily believe in the project.
Look at the roadmap and tokenomics
Look at the developer’s short- and long-term plans for the project. Do they have an extensive roadmap that explains how they want to progress the project?
If the project doesn’t have a comprehensive plan laid out, it’s possible that the developers have no intention of continuing to progress once the tokens have been sold.
It’s also important to look at the tokenomics of the token. Tokenomics refer to the key information about the token:
- Total supply
- Issuing schedule
- Token burns
- Token allocations
- Vesting schedule
If the tokenomics are strong, this could be a good sign that the crypto presale is legitimate.
Step 2: Create a crypto wallet
Once you’re confident that a cryptocurrency presale is genuine, you’ll need to create a cryptocurrency wallet.
Make sure the wallet you create is compatible with the blockchain that the crypto token is hosted on.
For example, if the token is an ERC20 token, you’ll need an Ethereum-based wallet such as MetaMask.
On the other hand, if you’re looking to buy a Solana-based token, you’ll need a wallet that accepts SOL, like Phantom.
Once you’ve chosen your wallet, create an account. Self-custodial wallets give you total control over your crypto assets, but you’ll need to note down your private key when setting it up.
This is usually a 12-24 word phrase that cannot be recovered if you lose it.
Step 3: Fund your wallet with base currency
Before you can buy crypto from a presale, you’ll need to fund your newly created wallet.
It is usually possible to purchase crypto directly from a wallet, but the most common method involves buying it from a centralized crypto exchange and transferring it across.
You can normally use a range of fiat currencies and payment methods – including PayPal, credit and debit cards, and bank transfers – to purchase your base currency.
Make sure you know which currency you need to use when buying your crypto tokens in the presale. Once you’ve bought this currency you’ll be able to transfer it directly to your wallet (usually for a small fee).
Make sure you buy enough cryptocurrency to meet the minimum purchase requirements and to cover any gas fees if you’re buying an Ethereum-based token!
Copy your wallet’s address and use this to send crypto from your chosen centralized exchange. Below, you can see what a Solana wallet address looks like on the Phantom platform.
Step 4: Connect your wallet to the crypto presale
Depending on the project, you may be given the option to connect your wallet to the crypto presale.
If this is the case, you’ll need to copy your wallet address and paste it onto the presale site, as directed.
You might be prompted to say whether or not you “trust” the wallet in order for it to connect properly.
Step 5: Swap crypto for presale tokens
Once the crypto presale is live, you’ll need to buy presale tokens using the crypto in your wallet. Decide how many tokens you want to buy – be aware that there will probably be limits in place – and click “Trade”, “Buy” or something similar.
You’ll be prompted to “sign” the transaction. If using a desktop, you’ll likely receive a popup notification. If you’re using your mobile device, you might be taken to your mobile wallet application.
Step 6: Claim your tokens after the presale
Once you’ve bought your crypto presale tokens, you may be able to claim them straight away.
However, it’s likely that you’ll have to wait for the presale to end, and potentially even longer, to receive your new crypto assets.
These tokens may be sent directly to your connected wallet or you may need to follow some steps on the project’s site to claim them.
Remember, if there is a vesting schedule you will only be able to claim a percentage of your tokens on specific dates.
Step 7: Move your tokens to a cold wallet
After you’ve received your tokens, you will probably want to move them to a cold wallet for safe storage.
A cold wallet refers to offline storage, usually in the form of a physical device. Although this makes it more difficult to actively trade with your tokens, it is the best way to keep your newly purchased assets safe.
How To Find Crypto Presales in 2024
You can find legitimate crypto presales through crypto listing websites such as CryptoRank and Coinlaunch. I recommend reviewing several websites and comparing the listing on each – some websites accept paid promotions.
Another good way to find upcoming token sales is through social media channels such as CryptoHub on X or r/CryptoMoonShots. These channels are a great way to find upcoming presale opportunities from other investors. However, you should be wary of crypto scams and rug-pull schemes.
Top Tips to Stay Safe When Buying Crypto From a Presale
It’s essential that you stay safe when buying any form of cryptocurrency, but especially during a presale. Follow the below tips if you want to know how to buy presale crypto safely.
1. Be aware of presale scams
Make sure you do thorough research to avoid crypto scams. Cryptocurrencies are relatively unregulated and there are people that will try to take advantage of this fact.
There are examples of people buying cryptocurrency tokens from a presale and never receiving them, or times when the project’s developers have disappeared once they’ve made money from the presale.
Do your due-diligence, check the project’s whitepaper, tokenomics and roadmap, take a look at their community, and see if the developers have revealed their true, real-world identities.
2. Never share your private keys
Don’t ever share your wallet’s private keys. If somebody has access to this, they’ll be able to access your wallet and steal your funds.
Make a note of your private key offline and don’t tell anybody.
If somebody asks you to share your private key as part of the crypto presale process, do not trust them!
3. Use a secure browser
Always use a secure browser when buying a crypto presale.
These browsers have additional, built-in security features that will block unauthorized third-parties activity. Consider using a VPN for additional protection.
4. Don’t give in to FOMO
Avoid emotional investing when looking to buy presale crypto. If something looks too good to be true, it probably is.
Don’t invest more than you can afford to lose, just because people are talking positively about a project’s potential. Always assume that the crypto tokens will lose value after you’ve bought them – if this happens, how will you feel?
Pros and Cons of Crypto Presales
Investing in a crypto presale comes with a range of advantages and drawbacks. It is important to understand both sides of the coin before putting any of your money at risk.
- Presales provide access to tokens whilst they are undervalued which maximizes the potential for growth.
- Some presales use gradual price increases to guarantee returns for the earliest investors.
- Investing in a crypto presale gives you a chance to diversify your protfolio with new tokens.
- Some presale offer token staking to earn money from your investment as soon as you have bought presale tokens.
- Crypto presales are not regulated or licensed.
- There is no guarantee that the funds raised throughout the presale will be used for future development.
- Not all cryptocurrency presales are legitimate.
- New crypto tokens can be extremely volatile and there is no guarantee that you will make money from your initial investment.
Important Things to Know Before Buying Crypto from a Presale
There are always new crypto presales, regulatory updates and market events being announced. Here is an overview of some key updates, last edited on the 12th of August 2024.
- Pawfury announced in August 2024 that it had made $5 million from its token presale. Investors have shown interest in the project due to its long-term roadmap and promise of high-yield staking opportunities.
- Bitcoin recently dropped to $49k and has since struggled to push past $60k. The huge plummet sparked worry among investors and has led to significant market volatility. The wider crypto market remains uncertain.
- Donald Trump has revealed a plan to ‘take on banks’ with a decentralized finance cryptocurrency platform. The ex-president’s campaign has pushed the price of Bitcoin upwards and increased interest in the coin.
When Bitcoin performs well, the wider crypto market tends to follow. Therefore, presale investors should keep an eye on the price of Bitcoin as well as other large-cap coins such as Ether, Solana and Dogecoin.
The Verdict and Next Steps
In this guide, we have covered everything that you need to know about crypto presales before investing. Crypto presales are a good way to get involved with a new project while the price of tokens is low. However, investing in these events comes with a high level of risk.
Always make sure that the project is legitimate and proceed with caution before signing up to a cryptocurrency presale. Create a wallet and fund it, connect your wallet with the presale in question and then store your new crypto tokens securely once you’ve bought them.
Now that you’re confident with what a crypto presale is and how it works, you can start looking for new projects that align with your overall investment goals. Keep an eye out on social media platforms, especially Twitter (X), and look out for crypto-related news sites that will report on any upcoming crypto presales.
FAQs
Is it good to buy presale crypto?
Buying crypto from a presale can be a good way to invest in new projects before tokens are listed on exchanges. However, there is no guarantee that the value of your investment will go up.
What is the best presale crypto to buy?
At the time of writing, Poodlana seems like the best presale crypto to buy. The project has managed to implement a strong marketing campaign that has successfully attracted investors from around the globe.
How do I know if a crypto presale is legit?
Legitimate crypto presales have a clear roadmap, strong tokenomics, a large social media presence and a token vesting period. You should also be able to verify the contract address on Etherscan.
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