Why does the Hamster premarket on ByBit resemble a casino? Let's understand the details

Premarket trading on the ByBit cryptocurrency exchange is becoming increasingly popular, but many market participants still do not understand what the process is and why it can be risky. Let's look at what premarket is and why it is similar to playing in a casino.

🗑 How the premarket works

In the premarket, you tell the exchange that you have a certain number of coins that you are willing to sell in the future at a predetermined price. As proof of the presence of these coins, you make an insurance payment equal to the amount of your transaction. For example, if you want to sell 100 coins for $200, you are required to put down $200 as a guarantee. If you fail to provide the promised coins, your insurance payment is lost.

🙂 Risks for the buyer and seller

From the buyer’s point of view, premarket is a risk of buying coins at an unfavorable price or receiving an insurance payment from the seller in case of non-fulfillment of conditions. If the coin exchange rate turns out to be favorable, the seller may refuse the transaction, preferring to lose the insurance payment rather than sell the coins at a reduced value. That is, the buyer cannot receive more than X2

From the seller’s point of view, there is a chance to profitably sell the coins at an inflated price, because the buyer will not be able to cancel the transaction. However, if the terms become unfavorable, the seller will simply lose his insurance payment. Purely theoretically, it is more profitable to be a seller. You may be able to turn pennies into hundreds of dollars.

🎰 Why does this look like a casino?

Premarket is a random game where no one knows the exact value of the coin, the order of the drop and the distribution. There is no known advantageous position. The game here is similar to roulette: both the seller and the buyer can lose, but only the exchange is in the black.

📈 Benefit for the exchange

The exchange earns from commissions: 2% from each transaction in the premarket and 5% if the seller does not fulfill his obligations. Your funds will be frozen, which gives the exchange the opportunity to use these funds without interest.

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