The year 2024 marks a new promising and challenging phase for the global financial market, especially with the strong development of pre-market trading. The concept of pre-market trading is no longer unfamiliar to traditional investors, but with the explosion of the cryptocurrency market, the trend of pre-market trading has gradually become more popular and offers many attractive investment opportunities.
Pre-market trading not only helps investors quickly grasp market information but also allows them to take advantage of investment opportunities before the official market opens. Let’s delve into the prominent trends of pre-market trading in 2024 with Unich Analysis. Find out about the opportunities as well as the risks that investors need to be aware of in an increasingly volatile and competitive market.
What is Pre-market?
In the cryptocurrency market, pre-market trading often refers to trading coins or tokens that have not yet been officially launched or listed on major exchanges.
Unlike the traditional financial market, the crypto market operates 24/7, so there is no fixed time frame for pre-market trading. Instead, pre-market in crypto involves transactions related to projects that have not officially launched but have plans to issue tokens.
Pre-market Solutions
In the cryptocurrency market, pre-market trading has existed for a long time, but previously users often had to conduct transactions through Telegram or unreliable platforms. This led to a high risk of scams as sellers could fail to fulfill the initial agreement to transfer tokens. The main reason is that these transactions have no binding agreements between the parties involved.
New OTC platforms like Unich have emerged to solve this problem by acting as intermediaries for users. Deposits from both parties are locked in a smart contract and only unlocked after the transaction is completed.
Benefits of Pre-market Trading
Benefits for Token Issuance Projects
- Price Specification: Pre-market trading helps projects determine the market value of the token before it is listed, thereby understanding the current supply and demand to prepare thoroughly for the Token Generation Event (TGE).
- Increased Awareness: Tokens being traded before the official launch help enhance community awareness and interest in the project.
- Early Market Feedback: Based on the trading volume, projects can gather early data from the market and adjust their token issuance and marketing strategies more effectively.
Benefits for Investors
- Early Investment Opportunities: Investors can own tokens before they are officially listed.
- Good Positioning: With thorough research, participating in pre-market trading allows investors to seize good opportunities and potentially achieve high profits when the token is launched.
- Market Analysis: Investors can predict and analyze crypto market trends based on information about which sectors the projects are working in and how well the community receives those sectors.
Benefits for Exchanges
- Increased Trading Volume: Pre-market trading helps increase trading volume on the exchange, thereby increasing revenue from trading fees.
- Attracting New Users: Exchanges can attract many new investors to participate due to the FOMO (Fear Of Missing Out) surrounding tokens during the pre-market phase.
- Increased Liquidity: Allowing pre-market trading also helps increase the exchange’s liquidity as more investors participate in pre-market trading, increasing the number of transactions and making it easier to buy and sell assets.
Benefits for Funds
- Project Valuation: Investment funds can assess the real value of tokens and projects through pre-market transactions. This helps them determine the development potential of the project and decide whether to continue investing.
- Easy Exit: High liquidity in pre-market trading allows funds holding tokens early on to exit their investment positions before the official listing on exchanges.
- Creating FOMO: Investment funds can influence the project’s pricing process, driving pre-market tokens higher to attract investors to participate in trading.
Challenges of Pre-market Trading
Challenges for Investors
- Order Matching Difficulty: The smaller number of investors participating in pre-market trading leads to difficulties in matching buy and sell orders.
- Large Price Spread: Low liquidity causes a large spread between buying and selling prices, increasing transaction costs and reducing investment efficiency.
- Lack of Information: Information about tokens during the pre-market phase is often incomplete or not widely published, making it difficult for investors to evaluate the value and potential of the tokens.
Challenges for Projects
- Liquidity Pressure: To maintain the attractiveness of pre-market trading, projects must ensure continuous buying and selling transactions. This can be a significant challenge, especially for new projects or those without strong community support.
- High Expectations: Projects face pressure from high investor expectations. If they cannot meet these expectations, the token value may drop sharply immediately after the official launch, negatively affecting the project’s reputation and long-term development.
Challenges for Pre-market Trading Platforms
- High Competition: The pre-market is becoming increasingly competitive, and platforms must strive to attract and retain users by offering appealing services and features.
- Lack of Liquidity: Many new pre-market trading platforms often do not list many attractive pre-market trading pairs, which fails to attract users to the platform, leading to a lack of activity.
The potential of the Pre-market
The Boom of New Projects
In 2024, there is a wave of new projects launching with plans to list tokens, creating strong demand for pre-market trading. Projects with airdrop programs attract even more attention, prompting users to delve deeper into these projects and enhance pre-market trading activity. Curiosity and the desire to own tokens early have driven pre-market trading volumes to unprecedented levels.
CEX Exchanges Joining the Pre-market Race
Recently, centralized exchanges (CEX) have started to compete in the pre-market sector. Tokens like Hamster Kombat (HMSTR) and Catizen (CATI) have achieved high trading volumes during the pre-market phase, encouraging exchanges like BingX, Bitget, and Bybit to develop pre-market trading features.
The appeal of this substantial trading volume indicates that the pre-market is becoming an attractive destination for users. In the future, we might see major players like Binance and OKX join this race, opening up significant growth opportunities for the pre-market and creating more potential for growth.
Developing New Mechanisms to Attract Users
Additionally, platforms are developing new features such as Pre-market Perp and Whitelist Trade to offer more investment options to users, making it easier for them to access pre-market trading.
Pre-market Trends in 2024
Main Forms of Pre-market Trading in Crypto:
Pre-market Perpetual
Trading perpetual futures contracts of tokens that have not yet launched, allows investors to take long or short positions based on their price predictions of these tokens.
Pre-market Trading (OTC)
Over-the-counter (OTC) trading allows investors to buy and sell tokens that have not yet launched, usually through smart contracts or centralized exchanges.
Pre-market Perpetual
Currently, Pre-market Trading is dominating over Pre-market Perpetual due to the high volatility of the pre-market and low liquidity. Many investors avoid futures trading because of the high risk associated with low liquidity, especially when trading in lots of $200-$1000, making access difficult. However, reducing the lot size in the future may increase liquidity, making Pre-market Perpetual trading more popular as futures trading becomes a larger share of total trading volume.
Whitelist Trading
Whitelist trading is also becoming a prominent trend. Buyers can purchase whitelist spots from projects to mint NFTs or participate in games to profit from airdrops after minting NFTs or playing games. This trend is expected to grow strongly as more projects allow players to earn airdrops through whitelists, such as The Beacons on Arbitrum or Lumiterra on Ronin. The “Play to Airdrop” and “Mint NFT to Airdrop” trends are attracting significant interest and are forecasted to drive whitelist trading.
Token Trading Trends on Pre-market
Market makers have also started to participate in pre-market trading, increasing the difficulty for investors. Many users have experienced “top slicing” with tokens like Avail or Layer3 due to inadequate research on valuation and price prediction based on similar projects’ market capitalization. In the future, investors will become smarter and tend to favor tokens in the pre-market with lower valuations, minimizing risks and optimizing profits.
Conclusion
The pre-market trading landscape in 2024 is brimming with potential and challenges. New projects and investor curiosity drive demand, while centralized exchanges and innovative platforms enhance accessibility. Despite issues like low liquidity and high volatility, pre-market trading offers significant opportunities. Investors are becoming more discerning, seeking lower-valued tokens to optimize returns and minimize risks. The dynamic future of pre-market trading, with major exchanges likely joining, promises substantial growth and exciting opportunities for projects, investors, exchanges, and funds.
