Pre Launch Token Trading Exhibits 20 Times Higher Volatility Compared to Post-Launch Trading
Crypto News– Pre-launch token trading is a growing trend among cryptocurrency investors, despite introducing up to 20 times the price volatility of post-token launch trading.
Volatility Trends Before and After Launch
Before their token generation event (TGE), cryptocurrencies like Wormhole’s (W) token experienced over 3,000% volatility, compared to around 100% one week after the coin was launched. Similarly, the Jupiter (JUP) token’s volatility rose to around 2,800% pre-launch, falling to around 150% one week after launch, according to a Keyrock report shared with Cointelegraph.
Impact of Market Liquidity on Volatility
Understanding how market liquidity affects a token’s volatility could help traders take more calculated risks. Due to the lack of liquidity in pre-launch markets, the price discovery phase of pre-TGE tokens has disappeared. In finance, price discovery refers to the period when an asset’s price is organically determined through the buyers and sellers.
Growing Trend Despite Challenges
Despite the challenges posed by the lack of liquidity and high volatility, pre-TGE trading remains a growing trend. More risk-taking investors aim to be the first to gain exposure to new crypto projects in the hope of higher returns.
FAQs
What does “pre-launch token trading” refer to?
Pre-launch token trading refers to the buying and selling of tokens before the official launch or token generation event (TGE) of a cryptocurrency project.
Why is pre-launch token trading significant?
Pre-launch token trading allows investors to potentially gain early exposure to new cryptocurrency projects. However, it also comes with higher levels of risk due to factors such as price volatility and lack of liquidity.
How much more volatile is pre-launch token trading compared to post-launch trading?
According to recent reports, pre-launch token trading exhibits approximately 20 times higher volatility compared to trading after the official token launch.
For the latest in crypto updates, keep tabs on Crypto Data Space.
Leave a comment