Secondary Market in Crypto: Why Does It Matter?

Imagine two stores: one is Walmart where anyone can enter and buy, the other is a wholesale warehouse only for dealers. That's exactly the difference between the secondary and primary market.

In traditional finance

The primary market is closed: only “qualified” investors and large institutions can access new issues of stocks, bonds, etc. The secondary market is where the average investor buys/sells those already issued assets. Stock exchanges, OTC markets… all of that is the secondary market.

In cryptocurrencies, it works similarly but with a twist

The primary market here are the token sale platforms (IDOs, presales, etc.). It's not that they close the door on you for being poor, but because you need:

• Sufficient capital to “risk” in new projects
• Connections to be the first to know
• Extreme risk appetite

Once the sale ends, the tokens arrive at DEXs and CEXs (secondary market), where literally anyone can buy out with $10.

What is the practical difference?

• Primary market (presale): Cheaper prices, but high risk. Many projects fail.
• Secondary market (exchanges): Prices may be higher, but there is liquidity and it is safer.

That's all. It's not rocket science.