IEO investment is considered a popular form of investment and brings high returns for investors. However, high returns always come with risks. Therefore, today’s article will share with readers about the risks that may be encountered when investing in IEO.
Price risk
The nature of IEO is also a project like ICO, also raising capital, like a company, it also has a specific roadmap, development direction, etc. And so it is not certain whether the project will be successful or not? It depends on the ability of the Project Leadership. You may have heard that the price of that IEO after going public will increase by five or ten times, but there are important factors such as the sudden collapse of FTX at the present time which is a clear example. Or the issue of legal regulations can also make the project unlikely to succeed so that prices continue to rise.
Exchange risks
There are many exchanges that issue IEOs on the market today. You should know that this is a good deal for investors, but compared to the floor, it is not as fragrant. A successful IEO for sale, the exchanges will take a huge fee along with marketing costs and even own some of the IEO tokens.
But when there are too many, it is difficult to choose, the easiest is always to choose large and reputable exchanges, small exchanges depend on the situation of judgment and consideration.
Risk of exchange token price used to buy IEO
Most of these IEOs must be purchased with tokens of that exchange: For example, IEOs on Binance exchange use Binance Coin (BNB), IEOs on Huobi Prime use HT tokens, etc.
Before the IEO, the price of tokens on exchanges will likely go up due to increased demand. Investors are forced to buy Exchange tokens to buy IEO, After the IEO ends, there will be a large number of investors who can’t buy exchange tokens, causing the price to decrease. Therefore, this is also considered an undesirable risk.
“Bad” IEOs
Like the exchange risk, once there are too many exchanges participating in an IEO, there will be a lot of IEOs appearing, there are good IEOs, and there are also very bad ones. They create a rudimentary project and apply for an IEO. Some exchanges will forget to carefully review the project for profit, as a result, investors will bear all the losses. This, we are not sure but think there will be jags appearing as this trend continues to blossom. If you buy the right one, your account will be split instead of X accounts.
Conclusion
Above are some risks when you invest in IEO. Hope the information in this article will help you. Please upgrade your skills and knowledge carefully before investing as well as regularly update your thorough knowledge about IEO to make a sound investment decision.
This is just the author’s personal sharing, so there may be shortcomings, please contribute in the comments section to improve the article.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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