5 Important Things Before Buying Newly Launched Tokens in Crypto!
Currently, new crypto tokens continue to emerge and promise great opportunities for early investors. With high return potential, it's no wonder that many investors and traders are tempted to buy immediately, hoping to gain profits before prices soar. This phenomenon creates a unique attraction where those who enter early can become winners. However, behind these opportunities lie various risks that are often overlooked.
Before jumping in to FOMO buy newly launched tokens, it is essential to understand what newly launched tokens are and what aspects need to be carefully considered before investing. This article will thoroughly discuss the advantages, risks, and strategies that can be applied before buying!
What is a Newly Launched Token?
Newly launched crypto tokens are digital assets that have just been introduced to the market through a specific launch mechanism. These tokens are part of blockchain projects that are generally still in the early stages of development.
The goal of launching new tokens is usually to raise funds from the public to support project development. Early investors hope that the token's value will increase as the project grows and gains adoption.
Some common methods of launching tokens include:
ICO (Initial Coin Offering) : Direct token sales to the public without going through exchanges, but tends to be high risk due to minimal regulation.
IEO (Initial Exchange Offering): Launching tokens through official exchange platforms, more trustworthy due to the selection process.
IDO (Initial DEX Offering): Launch through decentralized exchanges, open to anyone but prone to rug pulls if not supervised.
Unlike major cryptos like Bitcoin and Ethereum that already have a certain reputation and level of stability, new tokens generally do not have a track record. Thus, they tend to be riskier, but also offer high return potential if successful.
Benefits of Buying Newly Launched Tokens
Although the risks are high, investing in new tokens also has several attractive benefits, especially if done with the right strategy.
1. Potential 10x, 100x, even 1000x
One of the main reasons many investors are interested in buying newly launched tokens is the opportunity to get high ROI in a short time. For example, during an IDO or fair launch, tokens can be listed on DEX with a super small market cap. Once the community hypes and trading volume increases, tokens can pump several times.
For example, tokens like $PEPE or $BONK have rallied thousands of percent just within a few days after listing. But remember, this pattern does not always repeat.
2. Early Access = First Mover Advantage
Getting in before the listing on major exchanges can give you an edge over other investors. You can buy tokens while the price is still low and the circulating supply is not too much. When the token is about to be listed on a major CEX and FOMO starts to spread, you are already in a position to gain profits.
3. You Can Help Build the Community from the Start
Newly launched tokens are generally still in the early stages of community development (grassroots). Involvement in discussions, participation in governance, or helping to spread project information on social media like Twitter and Telegram can open opportunities to obtain strategic positions in the future. Early support is often appreciated by the developer team through special rewards or airdrops for early contributors.
Risks of Buying Newly Launched Tokens
Although the potential rewards can be large, buying newly launched tokens is also high risk. Here are some main risks to be aware of:
1. Rug Pull & Exit Scam
Many new tokens have anonymous developers, and after successfully raising funds from the public, they immediately run away with the liquidity. This often happens in DEX launchpads that do not have strict vetting processes.
If the token does not have a liquidity lock or doxxed team, the risk of a rug pull increases.
2. Smart Contract Exploitation
Tokens that have not gone through a security audit may have vulnerabilities in their smart contracts. In some cases, hidden functions such as backdoors can be inserted by developers to unilaterally mint tokens, block user transactions, or even completely delete the token supply.
3. Extreme Volatility
New tokens generally do not have price stability due to minimal market depth. Prices can experience high spikes (pump) of up to thousands of percent in a short time, then drop drastically (dump) on the same day. Price movements are often influenced by large investors (whales) who can easily move the market. Without the right strategy, buying at peak prices can risk significant losses.
4. Low Trading Volume
Low trading volume poses a significant challenge for the liquidity of new tokens. Most are only available on decentralized exchanges (DEX) with minimal daily transaction numbers. This condition makes the buying and selling process difficult, and increases the risk of slippage, which is a significant price difference between when an order is placed and executed in the market.
So, what are the smart strategies before buying Newly Launched Tokens?
If you are interested in becoming an early investor, here are 5 important strategies to consider before buying newly launched crypto tokens.
1. Read the Whitepaper & Check the Developer Team
Before buying a token, take the time to study its whitepaper. This is like a business proposal that determines whether the project really has value or is just sweet promises. It is also essential to know who the developer team behind it is, whether they have a good reputation and experience in the blockchain world.
2. Community Activity
The community is a reflection of the life or death of a project. Check social media like Twitter, Discord, Telegram, and Reddit. Is the discussion active, healthy, and supportive? Or is it just filled with spam? Serious projects usually have active communities involved in technical discussions, education, and transparency of information.
3. Understand Its Tokenomics
Tokenomics is like the financial structure of a crypto project. You need to check:
Total and max token supply
Token distribution (what percentage for the team, early investors, the public)
Is there a mechanism vesting or locking for the team?
Avoid tokens whose supply is too large in the hands of the team or developers, as this can increase the risk of price dumps in the future.
4. Check If It Has Been Audited
Security is everything. Newly launched tokens are very vulnerable to technical errors in smart contracts, which can be exploited by irresponsible parties.
Before buying, ensure that the token has been audited by a trusted third party like CertiK. An audit shows that the project team is serious about ensuring security and transparency.
Conclusion
Investing in newly launched tokens requires careful consideration given the potential profits that are commensurate with the risks involved. Investment decisions should be based on comprehensive analysis of the project, not merely on speculation. Investors are advised to conduct thorough due diligence, including evaluating the track record of the developer team, the validity of the project, and market potential. Caution and effective risk management are crucial factors in mitigating potential losses.
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Risk Disclaimer: Cryptocurrency prices are subject to high market risk and price volatility. You should only invest in products that you are familiar with and where you understand the associated risks. You should carefully consider your investment experience, financial situation, investment objectives, and risk tolerance and consult an independent financial adviser before making any investment. This material should not be construed as financial advice. Past performance is not a reliable indicator of future performance. The value of your investment can go down as well as up, and you may not get back the amount you invested. You are solely responsible for your investment decisions.
