Tips and Tricks on Investing in Initial Exchange Offerings

Initial Exchange Offerings (IEOs) tend to have a high / risk reward. When investing in an IEO, you should consider the project and exchange it is on carefully.

So far most IEOs aside from ones that had a limited pre-sale on Binance have dropped drastically upon release. This means that in many cases people have lost money on IEOs (while in a few cases lucky early investors have had mind blowing gains).

Consider:

  • Veriblock’s pre-sale was at $0.10 and trades at $0.04 as of May 7, 2019.
  • Ocean, pre-sale at $0.12 trades at $ 0.002319 as of May 7, 2019.
  • However, BTT which launched at around $ 0.00012 in a very limited pre-sale currently trades at $ 0.000624 as of May 7, 2019.

Those are just some examples, but you get the gist. The gist being, “IEOs can be hit or miss, and it matters what the project is, what exchange IEO is on, and as we will cover… potentially what the pre-sale round looks like.”

Thus, if you are asking “based on historical data is it a sound investment to buy into an IEO” then the logical answer is “only under very specific conditions and with the risks in mind.”

With that said, not every investor is of the same mind set and, as noted, not every IEO is created equally.

If we are looking at just the top IEOs from the top exchanges (lets say Bittrex, Binance, and Bitfinex) and then we go and look at each project, we might find one or two that to us are worthwhile moonshots.

And further, just because an IEO preformed poorly out of the gate doesn’t mean it’ll never be a buy. In fact, some may choose to wait until an IEO’s price has come down to invest in it. If you look at IEO charts over time you will see ups and downs, and you’ll note that there is always a good place to buy if you can time things right.

That said, so far, those who have done the best have been early IEO investors on Binance specifically.

In IEOs on Binance where there was a very limited pre-sale, and thus big players could buy cheap, the price tended to sky rocket upon launching.

However, in IEOs where everyone had a chance to buy in, and in IEOs not on Binance, the price has tended to plummet after launching.

That isn’t a comment on Binance, that has just been the trend thus far (May 20th 2019; I updated this article a bit since the IEO Matic did very well and most Binance IEOs rallied from lows with it).

The last note I’ll make is that buying into the pre-sale is a moot point for most US citizens, so for us (and for those that just want to limit risks) waiting until an IEO launches and then comes down and buying it on exchange might be the best bet. As, even if it means waiting a while and paying a higher price in some cases than early investors, at least you get a chance to see how the coin preforms.

Or at least all of that is my opinion based on what has happened so far. You can check the performance of IEOs for yourself at CoinCodex and come up with your own takeaway.

What I find when I look at the data is that all IEOs have at this point preformed poorly except for Binance IEOs… and with Binance IEOs, in most cases you had to be a lucky early investor to get the best prices (although BTT and Matic both give late investors a chance to get a good price on market before they ran).

So, IEOs can be very risky, and so far not so good for many… but let’s not count IEOs out yet, instead, just be cautious and smart when making your IEO trades / investments.

TIP: the chart below shows those early Binance IEOs where mostly big players got in early and then the price launched way higher than the IEO price. This may make you think “wow, IEOs are great.” However, this is incorrect. Most IEOs after this, especially the ones where normal people could buy in, have preformed poorly. For the article that chart below was taken from, see: IEO Hype: Binance Launchpad Gains Make Up a Bit Less than 380% on Average.

Project Hard cap % of supply IEO Price (USD) Current price (USD) ROI (USD) All Time High (USD) ATH ROI (USD)
BitTorrent $7,200,000 6% $0.00012 $0.000768 640% $0.001250 1041%
FetchAI $6,000,000 6% $0.08670 $0.199377 230% $0.430755 496%
Celer $4,000,000 6% $0.00670 $0.017816 266% $0.040000 597%
Average 379% $0.157335 711%

NOTE: There was a time in 2017 where every ICO lost value as soon as it launched. In those days I would tell people to jump on a DEX and buy ICO tokens cheap after they launched. That advice was very good until it wasn’t. As you see, there came a day when the ICO craze heated up and then really you wanted to literally buy into every ICO during the pre-sale. Maybe it’ll be like that with IEOs one day, but like, it isn’t right now.

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