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With the Rise of IEOs, Investing in Altcoins Can Be Brilliant

Last Updated March 4, 2021 2:35 PM
P. H. Madore
Last Updated March 4, 2021 2:35 PM

By CCN.com: It’s unpopular to say this in some sectors, but it can be brilliant to invest in altcoins. If you’d bought up a ton of Binance Coin when it was first offered, for example, you’d have made your investment back plus many hundreds of percent by now. This can be the same for upcoming IEOs as it was during the ICO boom. Functionally, the only difference is the backing of the exchanges themselves, which implicates them as much as it credits them.

CCN.com tweet
  IEOs are gaining popularity among investors. | Source: Twitter

IEO: ICO With Perks?

The initial exchange offering brings a benefit that previous ICO waves didn’t have: traders will know what the first exchange to list a given asset is going to be. Other exchanges will be able to support IEO tokens relatively fast – once they’re live – but those doing the listing will be setting the basement market price. From here, other prices will emerge; whether higher or lower, the first exchange will make the bulk of the initial trading fees on the new tokens.

That, of course, would make a lot of sense. But the reality of the scheme is that exchanges have to provide a massive list of cryptos to earn serious fees. Whether they charge the fees in the currencies themselves or charge them based on the bitcoin price, exchanges need volume to make money.

It’s not just a matter of appearing more attractive: volume is where they earn significant fees. If billions flow through an exchange, then they’ve made hundreds of thousands or millions.

If this happens every day, they can become rich.

The only way for it to continue to happen consistently is for there to continue to be a variety of assets to choose from. If exchanges weed through the masses of poor projects and laser in on projects that might provide some value to their investor, the next wave of token sales might make a lot more sense. New token allegiances will have some new nuance: you may not like a particular token because you didn’t have an account on the exchange that launched it, for example.

Exchanges Need New Tokens to Increase Volume

Unlike many of the ICOs that ran in 2017, exchanges have their business to keep in mind. The exchange offering model brings a new insight into the market; depending on who is doing the listing, the model may lend some credibility to certain projects.

People in the blockchain space have already proven their willingness to take a gamble. Indeed, the money is ready for the next token run. The main question is whether the new “IEO ” spin will have a positive impact or not. If so, what will it look like? Will a tokenized future emerge out of the next bull run?

If you’re wondering, the prospect makes us groan too. The blockchain might present several unique opportunities, but it’s not a fix for everything. One can only hope that entrepreneurs will keep this in mind as they approach the space in the coming months.

If you time your exits correctly, investing in altcoins can be as lucrative  or more than trading bitcoin. Bitcoin often leads a bull charge, but you can still gain 200% and above in some token markets at the right times. An active trading strategy that has room for exploring new products is more likely to yield a reasonable return than a simplistic “buy and hold” strategy. Both will likely generate profits, but if you time your entry and exit on many of the emerging tokens, you’re likely to make money faster.